If you haven’t read the Rambus post, that Fully highlighted earlier, you really should. It gives a superb, and in my view, vital, alternative scenario. He’s clearly hugely experienced, and this gives great balance to a lot of the gold bull/dollar bear possibilities. I use that term ‘possibilities’ deliberately, because the future is rarely clear-cut. I have a strong bias, expecting a gold bull into 2026 as you may know, but closing your eyes to all other possibilities would be foolish.

So, getting to the point. The ONLY thing I can think of that I would question, is why use a log chart for the dollar index. I do it often enough, but surely, from a mathematical (and therefore, charting) point of view, the only reason to use a log chart is if the thing you’re charting is behaving in an exponential fashion. Gold for example, or the stock market. If it’s numerical value is changing by orders of magnitude (you keep needing to add another zero to the numbers), then a log chart is valid. That’s not the case with an index like the US Dollar. Quite the opposite in fact – the DXY has been peaking at 100 to 160 for the last 3 cycles/50 years.

If that’s the case, perhaps the reason the dollar has bounced here lies elsewhere. In fact, I showed it on two separate charts yesterday. If you use the more appropriate, non log, linear chart scale, we are nowhere near hitting that resistance/support line yet (extension of the black line on my chart below). But, and this is the interesting bit, we are bouncing at a confluence of the long term horizontal support and rising, bull market uptrend. Here’s the chart (note the meeting of the red lines and then the blue lines)…

So, there are three things I’d conclude,

1). This is exactly what happened last time, and it didn’t stop the dollar bear cycle unfolding

2). Either way, it amounts to the same thing – the dollar needs to drop here for the gold bull to really get started

3). If it doesn’t, we’re screwed