• 22 hours Trump Signs Executive Order To Protect Private Moon Miners
  • 2 days Renters Are Striking As COVID Reshapes Real Estate
  • 2 days Nothing Can Stop The Tesla Boom
  • 3 days 9 Ways The Lockdown Is Playing Out Around The World
  • 3 days WeWork Sues SoftBank For Withdrawing $3 Billion Insider Payoff
  • 4 days Solving Transportation’s Biggest Problem
  • 4 days Big Banks Could Win Big On Fed Small Business Bailout
  • 4 days Trump Increases Pressure On Venezuela
  • 4 days Researchers Create Organic Battery
  • 5 days Gold Is Still A Safe Haven, But Not Very Alluring
  • 5 days China Is Buying Up Billions Of Barrels Of Cheap Crude Oil
  • 6 days Are Gold Stocks Going To Bounce Back?
  • 6 days The Politics Of A Pandemic
  • 7 days What Does CHina’s EV Slowdown Mean For The Battery Metals Sector?
  • 8 days COVID Report Cards Will Brand Businesses Forever
  • 8 days Trump Tweet Sends Oil Soaring 25%
  • 9 days Why The Coronavirus Economic Crash Is Worse Than You Think
  • 9 days Is A Global Currency Necessary?
  • 10 days America Has Shed 500,000 Millionaires Since The Coronavirus Lockdown Began
  • 10 days Trump Wants Another $2 Trillion Economic Intervention
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

A Powerful Signal for the Coming Silver Rally

The silver price and the US Dollar/South African Rand exchange rate (USD/ZAR) have a very interesting relationship that goes back a long way. Due to the nature of this relationship, I have found the USD/ZAR chart to be a good tool for determining a silver bottom.

In Jan 1980, when silver peaked at about $50, the USD/ZAR was trading at around 0.817. Today, the USD/ZAR rate is trading at about 14.366 - about 17.6 times higher than the Jan 1980 rate, whereas silver is trading at $16.2 - almost three times lower than the Jan 1980 high.

So, in the long run, the two move in opposite directions. When the USD/ZAR rate is moving up, then the silver price is moving down, and vice versa. Furthermore, when the USS/ZAR rate is making a top, then a bottom in silver is normally very close (before or after the USD/ZAR peak).

In a related manner, the US Dollar Index provides a good signal for when gold rallies are coming.

Below is a basic short-term fractal analysis of the USD/ZAR chart (from fxstreet.com):

USD/ZAR Chart

On the chart I have highlighted two possible fractals (with points 1 to 5). The fractals are very similar (the angle is a bit different), and importantly appear during similar conditions (relative to a Dow peak). The second fractal appears to have reached point 5, which is a short-term top for the USD/ZAR chart, and very likely a long-term peak (since 1980).

If it is indeed a long term peak for the USD/ZAR rate, then one should expect a very important bottom for silver around that date. Silver did make a bottom on 14 December 2015, about a month before the USD/ZAR top. This silver bottom will likely proof to be the ultimate low before the coming multi-year rally.

Below, is another comparison (from my 12 Feb 2016 premium update), showing the relationship between USD/ZAR peaks and silver bottoms:

USD/ZAR Monthly Chart

On the chart (from tradingview.com), I have drawn blue lines at the 2001, 2008 and potential Jan 2016 USD/ZAR peaks. One can see how close to these peaks the 2001, 2008 and potential Dec 2015 silver bottoms were.

Given, the look of the Jan 2016 candlestick; it is likely that the USD/ZAR chart has peaked.

If it has indeed peaked, then there is a very strong likelihood that the December 2015 bottom in silver is actually the bottom since the 2011 peak. It is interesting to note that there is a 7-year interval between the silver bottoms.

Warm regards,

 


For more on this and this kind of fractal analysis, you are welcome to subscribe to my premium service. I have also recently completed a Silver Fractal Analysis Report as well as a Gold Fractal Analysis Report.

 

Back to homepage

Leave a comment

Leave a comment