In theory your opinion sounds right and yes most pundits believe it religiously.(That is my greatest problem.)
I think in practice it doesn't work that way. Or else the almighty US dollar would be much much higher than where it was in DEC 2015.
DEC 2015 ....the USD index was 97-100 and after 5 rate hikes the USD index is at 89-90.
Inflation and higher rates move together. You can't have inflation and low rates Or higher rates and deflation at the same time.
If higher rates were good for currency then Brazil, India, Russia, Argentina would have the strongest currency. Rates are way way higher over there. One could just keep their money in the bank and get great returns. But the problem is that money buys very very less. Not to mention Weimar Germany and Zimbabwe. I am not comparing the great United States of America with any of the above mentioned countries.
Look your theory could be right but I tend to believe what is actually happening then what people think.
Of course, I have mentioned it brings pain to not understand the psychology of other people in the market.
Making money is more important than being right. One could be wrong and make money and one could be right and still lose money.
For e.g most people think BDR will go bankrupt and that is why they are selling. I am aware of the risk but not selling as I believe BDR will eventually make good. I am willing to take the pain until that happens.
So far what is happening is the smart traders sell gold & miners and buy the US dollar before the rate hike, and quickly reverse after the rate hike. I don't know why they do this way but that is what is happening since DEC 2015.
Maybe @colinchi knows.......he seems to know everything and @we9smia mentioned he has the authority here. So@colinchi might have something to say about the rates/inflation/dollar/gold...strength/weakness.
BDR Price at posting:
9.3¢ Sentiment: None Disclosure: Held