• 53 days Could Crypto Overtake Traditional Investment?
  • 58 days Americans Still Quitting Jobs At Record Pace
  • 60 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 63 days Is The Dollar Too Strong?
  • 63 days Big Tech Disappoints Investors on Earnings Calls
  • 64 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 66 days China Is Quietly Trying To Distance Itself From Russia
  • 66 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 70 days Crypto Investors Won Big In 2021
  • 70 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 71 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 73 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 74 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 77 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 78 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 78 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 80 days Are NFTs About To Take Over Gaming?
  • 81 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 84 days What’s Causing Inflation In The United States?
  • 85 days Intel Joins Russian Exodus as Chip Shortage Digs In
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

Gold In Excess Of $8000 While US Dollar Collapses

The US Dollar Index is not a measure of the value of the US dollar relative to gold. However, there is a relationship between the US Dollar Index and gold price rallies.

The best gold price rallies came during periods where the US dollar index was in a declining trend.

During the 70s, for example, the US dollar index was in decline during the major gold rallies (1971 to 1974, and 1976 to 1980).

The same, but opposite, is also true for the biggest gold declines, in that they occur when the US dollar index is having its best rallies.

Below, is a US Dollar Index chart (from tradingview.com) since 2012:

US Dollar Index since 2012
Larger Image

For many reasons, the price pattern since June 2014, is not likely a bullish flag or pennant-type pattern. Notice the divergence between price and the RSI (between the two blue lines) – this is one reason. Price has marginally made a higher high, however; the RSI has made a significantly lower high instead. This suggests that the US Dollar Index is going lower.

Therefore, it is likely to follow the RSI to the June 2014 breakout level, and even possibly lower. With this kind of decline in the US Dollar Index, gold is likely to have a strong rally.

Previously, I have shown how the long-term analysis of the US Dollar Index suggests that the gold rally is likely to be similar to the gold rally of the late 70s. Below, is an updated version of that chart:

US Dollar Index since 1968
Larger Image

On the chart, I have marked two fractals (1 to 5). Both fractals exist in similar conditions – relative to the relevant Dow/Gold ratio peaks (1966 and 1999). If the current pattern continues to follow the 70s pattern, then the US Dollar Index is likely to decline significantly over the coming months.

This analysis also indirectly shows that gold is likely to perform in a similar manner to how it moved from about $100 to $850 in the late 70s. Furthermore, the analysis suggests that we are now at a point similar to January/February 1977. If this pattern plays out like it did in the late 70s, and gold has a similar rally, then we will see a gold price in excess of $8000.

Based on my other analysis, including the likelihood that Dow is likely to collapse during the coming US Dollar Index decline, it is very likely that the current gold rally will far exceed the one of the late 70s.

Warm regards,

 


For more of 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