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On the chart below, I
show the inverse relationship between the US Dollar and Gold...
you'll easily notice the inverse relationship between the US
Dollar and Gold during Stages #A thru
#J, generally meaning; when the US Dollar drops, Gold
rises... when the US Dollar rises, Gold drops... and when the US
Dollar consolidates, Gold also consolidates.
The US Dollar and Gold did de-couple from
this relationship during Stage #G,
when both Gold and the US Dollar moved noticeable higher,
however, this stage also happened during the period of Katrina
and the resulting higher energy prices and other spin-off risks.
Further, from my analysis, I conclude;
when the US Dollar begins the test of it's long-term low support
level at approx. 80, that event will trigger the very
beginning stages of a new mania in the Precious Metals Sector...
however, we could easily see the Dollar bounce up from approx.
80... and then re-test it's lows to
find out where the longer-term support for the Dollar really is...
IMO, any pro-longed period the
US Dollar spends below it's long-time support level at
approx. 80, the Precious Metals sector will likely be in a very,
very aggressive Bull Market, eclipsing all other previous
Precious Metals Bull markets, with Gold likely trading well in
excess of $1,000 per oz.
In fact, since just the year 2002, the US
Dollar has lost over 30% of its value... and is now only
a few percentage points away from testing its low-range long-term support
levels. |