As stated earlier, the U.S. dollar (USD) should gain against all currencies, except the JPY, in the coming years. I predict the USDX, currently at 76.50 + / -, to be about 99.50 + / - by 2013.
What does this mean for commodities? The U.S. dollar has an inverse correlation with some commodities and stock market indices (equities).
So lets see,
Oil: The oil should keep falling the rising dollar. So we should see oil prices much lower than it currently is. The WTI is currently around 84.00, will rise to 90.50 approx. and then it should begin to fall again. Quite possibly we will see a barrel priced @ USD50.00 in a few years.
Gold: Gold is the current bubble. After reaching 1920 points and being considered the safe harbor, gold presents itself with a huge MACD divergence on the weekly chart. This divergence should lead to a minimum target of 1043.900 in the upcoming years. George Soros, not surprinsingly, bought spot Gold as well as companies that exploit gold a few years ago. Soros sold most of his investments in gold by July / August this year. Needless to mention that Gold is also inversely related to the USD.
Silver: Almost a twin of Gold. We must also see Silver much lower in the coming years.
This will reflect directly in stocks related to commodities in Brazil for example. We should note, for example, significant drop in stocks of Petrobras and Vale in the coming years.
The recommendation is to go short selling in the commodity spot corrections and also the papers linked to the commodity itself.
That is, when we look at the DOW @ 11,700 and oil above 90.00, the USDX at 76.00, you can indulge yourself short selling (short selling) Oil, Gold, Silver, Petrobras and Vale with good leverage. Conservative stops above the highs of the day, week or month depending on your risk appetite.
As stated before, the USD and other assets are in for a short-term correction. The minimum targets for these corrections are already within reach. Possibly this could happen Monday. Let's look closely at the market at the beginning of next week.
Once they are reached , these targets should resume the dollar uptrend, the decline in stocks and commodities in the long run.
Cheers to all.