Previous Post: Gold and Oil fundamentals are married together
In chart 1, the red dots marked A to F show the periods where US Federal Tax receipts showed negative growth year over year (YOY). US tax receipts have slowed due to the inflation fighting measures applied by world governments. US inflation has fallen from 9% to 3%. Job done! Now some tight monetary controls can be withdrawn, a lower dollar for one. Each red dot is also timed with a slump (in different degrees) in the US Dollar index (DXY).
POINT: A fall in the US dollar is one of the methods used to inject more US dollar liquidity, or easier money, this tends to be inflationary. A rise in the US dollar removes dollar liquidity, or tighter money, this tends to be deflationary.
When the US dollar falls, it allows for higher prices for gold and oil. Depending on oil fundamentals at the time, both oil and gold can rise dramatically higher. Tax receipt slumps A, C, D, E, and F enjoyed handsome games on recovery.
Currently YOY% change of US Tax Receipts are negative, this should be followed by a lower US dollar and higher gold and oil prices over the next 6 to 12 months. By how much, we shall see.
Chart 1 - US dollar, US tax receipts, gold and oil.
Chart 2 - US Dollar Cycle: Plenty of room to move down for the DXY.
Chart 3 - US Dow Jones Cycle: As a falling US dollar is easy money liquidity injection, will it be enough for stocks to move higher in line with 900 day period cycle. Why not!
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