The US$ rally was set into motion on August 4, by the movement of huge sums of money into short term US Treasury Bonds. The money for the bond purchases was funneled through Swiss and Eastern European institutions. We’re talking $50 Billion. It appears, though no smoking gun, that the funds that set off the US$ rally, was big Russian money. Russian money from connected insiders that knew in advance of the Russian invasion of Georgia. As it came to pass, the Russian invasion caused the Ruble to crash and Russian stock markets to do a swan dive.
All the Russian money pouring into the US$ set off a buying/short covering $ panic. Institutional/hedge fund black box trading algorithms are programmed to do the following when the dollar moves up: Sell Oil, Sell Gold and Commodities, Buy US equities.
The mass movement of Russian money into the $, combined with program trading is THE reason that gold and oil sold off on the news of the Russian invasion, a geopolitical event that normally would have had the opposite effect on oil and gold.
Thanks for your elucidating post. Your views were presaged by a close friend of mine last evening. He also thinks the Russians are up to something more sinister than the mere taming of Georgia.
The Georgian war formed part of an unscrupulous play on the stock market? Allowing rich Russians to get richer at the expense of their countrymen?
I find that very easy to believe.
I’ve been puzzling over what the heck was going on and your explanation answers my questions. Thank you.
LOL!
Over $500 billion in Treasuries trade every day.
Trillions in currencies trade every day. You think a turnaround would be caused by $50 billion? LOL!
I don't know what Russia had to do with it but 50 billion might be oh, say 25% of Lehman Brothers' daily repo book? No way is that going to move any currency market. The currency markets are in the trillions daily.
Do you have a source for this theory?