Gold and USD Index Below Trump’s Presidency…

The one comparable case is the 2020 breakdown and its invalidation that came about in early 2022. Again then, the USD Index continues to rally for about 15 index factors. If the identical occurs once more (be aware: I’m not writing about one thing fully new occurring – I’m writing concerning the latest previous being repeated), then the USD Index might rally to about 120 – it’s a important, medium-term excessive.

Can the USD Index actually transfer as excessive? Sure – it will be simply historical past’s rhyme, nothing significantly new.

The impression on the valuable metals market can be unfavourable, and the above chart reveals how dangerous issues might get.

Given the latest extraordinarily oversold studying from the RSI and the excessive gold just lately rallied, there are solely two comparable conditions within the latest previous: the 2011 excessive (proper earlier than that top) and the ultimate 2008 high. Gold, silver, and mining shares plunged in each instances, so the implications are very bearish.

On a facet be aware, the medium-term bottoms within the USD Index are sometimes accompanied by some sort of concept primarily based on which the USD is changing into ineffective and substituted by different currencies. Again in 2008 it was the dual deficit and just lately de-dollarization is what is commonly talked about as the explanation for greenback’s “unavoidable” demise. I bought fairly many requests to touch upon it when the USD Index was bottoming earlier this yr and I’ve been repeating that it’s possible an indication of the underside that this subject emerged (an indication of extraordinarily unfavourable sentiment) and never a legitimate basic cause for decline’s continuation.

Perhaps the world will step away from utilizing the USD, however:

1. That is unlikely to occur anytime quickly.
2. In my opinion, it will likely be a transfer towards CBDC (gov’t crypto) and never different fiat currencies.

Transferring again to the above chart, the analogy to 2011 is especially fascinating – again then gold continued to rally for a while after greenback’s RSI moved beneath 30. The identical occurred just lately, gold continued to maneuver increased after which made a transparent high – identical to what we noticed in 2011.

Mining Shares and Broader Market Tendencies

Now, as I wrote yesterday, the state of affairs would turn into significantly bearish for mining shares if the inventory market additionally declined. Specifically, seeing world shares (not simply U.S. shares) collapse can be prone to set off important declines within the miners.