Skip to main content

But In Yen Terms....

October 22, 2021

If you take the US Dollar out of the equation, it's a much different story for Gold.

While Gold continues to struggle below its 2011 highs, when priced in other currencies, it's been consolidating well above those former highs.

This doesn't change the fact that investors have been better served elsewhere over the past year.

But I think it does present the possibility of a weaker dollar sparking a rally in precious metals.

This is what's happening with the US Dollar Index.

Notice how the Dollar stopped going up near 94.50, where it struggled a year ago.

Moving forward I'm watching those August highs. If the Dollar is below 93.40 then the selling can really get going.

Gold Miners are likely to be a huge beneficiary from these developments.

If $GDX is above 31 then a long position makes sense to me, especially with Momentum in a bullish regime.

Look how RSI never hit oversold conditions. Those are characteristics of uptrends, not downtrends.

We'll see if price cooperates here.

But if $GDX is above 31, then the benefit of the doubt goes to the bulls.

Same with Silver. If futures are above 23, Silver is innocent until proven guilty:

One thing worth watching is the relationship between Copper and Gold.

Even with the recent bullish developments for precious metals, the weight of the evidence continues to point to base metals continuing their outperformance:

If Copper keeps outperforming Gold, that suggests higher interest rates.

However, if this isn't just a Gold benefiting from a weaker dollar thing, and more about Gold taking leadership, then we'll have to question the whole higher interest rates thesis.

So while precious metals have presented a nice opportunity for a trade, there's also valuable information here.

What do you think it means?

Let me know!

JC

 

 

Filed Under