Never A Dull Moment at the New White House

Whether you focus upon geopolitical hotspots such as North Korea or Venezuela or you focus your attention on today’s firing of the new White House communications director, Anthony Scaramucci, one thing is for certain. There’s never a dull moment at the White House with this new administration.

With only six months under their belt, this new administration has been mired in conflicts, both internal and external. Today, better than most days, illustrates this fact.

However, even though today’s geopolitical turmoil and chaos at the White House seems to be at an elevated level, the net result and effect on the U.S. dollar is very similar to other days, weeks, and even months we have witnessed this year as the U.S. dollar continues to plunge to lower pricing.

This last day of July will conclude with the U.S. dollar continuing its free fall, today alone losing roughly 4/10 of a percent of value vis-à-vis the U.S. dollar index. The dollar is now trading at 92.73, down 38 points on the day. More alarming is the fact that the dollar has lost well over 10% in value since the presidential election took place in November of last year.

After reaching a peak value of 104 between December 15 and January 3 of this year, the dollar index has declined over 11% as it is effectively trading below 93 today. The U.S. dollar decline has been in a steady and persistent freefall. More importantly, it does not seem to have any bottom in sight.

Recent declines in the U.S. dollar have certainly moved the needle in terms of gold and silver pricing. As of 10 o’clock Eastern Daylight Time, gold prices are currently trading nominally higher, with spot gold trading up $0.50 on the day. This move is predicated entirely on a weaker U.S. dollar more than compensating for any selling occurring in gold.

According to the Kitco Gold Index (KGX), spot gold is currently fixed at $1269.60. This price can be broken into two components: the net change due to a weakening U.S. dollar and the net change due to trading. Of these two components, a weak U.S. dollar is adding $6.70 in value, with normal trading resulting in selling pressure taking gold down by $6.20. The net effect of this action is gold prices trading up $0.50 on the day.

It is quite obvious that the chaos found internally within the White House, as well as the chaos with geopolitical hotspots internationally,  continue to have significant repercussions on the current administration. It has also become apparent that these events have greatly influenced dollar value as the credibility of this administration vis-à-vis the U.S. dollar continues to decline week over week month over month.

Wishing you as always, good trading,