Dollar Up, Gold Up?

In order for the gold bull to be sustainable and break out to real all-time highs, it will have to do so alongside a higher dollar.

I’ve repeated this for nearly five years now.

Another phrase I’ve repeated that those around me are probably sick of hearing is, “the U.S. dollar is still the cleanest dirty shirt in the currency basket.”

Dirty for sure, but the cleanest.

I’ve speculated for years that the Euro — in its current form — would be the first to fall.

Last week, the European Central Bank (ECB) announced that it will allow lenders it supervises to exclude certain exposures to the central bank from their leverage ratio until June 27, 2021.

The official justification was that “In this way, the institutions will have more room to incur debt since the ECB will not require more capital for it.”

What that means is that the ECB will not take into account the liquidity (cash and deposits) banks hold at the central bank when calculating the leverage ratio (Capital/Assets).

Don’t try that at home, everyday citizen.

This amidst the revelation (read with intended sarcasm) that banks around the world, led by Deutsche Bank, facilitated more than half of the $2.7 trillion of suspicious transactions that were flagged by the U.S. government over nearly two decades.

The records show that the five main global banks — JPMorgan, HSBC, Standard Chartered Bank, Deutsche Bank, and Bank of New York Mellon — have continued to engage in facilitating these transactions despite U.S. authorities having fined these financial institutions for previous similar dealings.

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