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I got this email from Mike Swanson , an analyst of some note.
A Key US Dollar Index Indicator Has Now Triggered (Profit Pivot) – Mike Swanson (04/08/2019)
We are heading for a fascinating moment in the markets. Right now people are happy that the stock market has been rallying since Christmas and all CNBC talks about is what the stock market is doing. Gold is up this morning and they won’t say a word about it even though mining stocks have been among the top sectors of the market since October 1st crushing the performance of popular stocks like Apple.
But something much more important is lining up in the currency markets that will cause an explosive rally in gold before the year is over.
Take a look at the US dollar index and how the 200-day Bollinger Band width indicator on the bottom of this chart has collapsed and flat lined.
What this indicator is showing us is that the volatility in the US dollar index has shrunk to nothing. When that happens in a market it leads to an increase in volatility – which means a big move.
The US dollar index has been churning in a range with $98 as resistance and $94 as support. When it breaks that range it will make a big move.
A close below $94 will mean a breakdown and the start of a new decline.
Since gold tends to trade opposite to the US dollar look for gold prices to explode to the upside on a US dollar close below $94.
There are a lot of reasons to think this is going to happen in the coming months.
I’ll just give you two today.
Last week Larry Kudlow – Trump’s economic advisor – got on CNBC and demanded an instant 50 point interest rate cut from the Federal Reserve to force the stock market higher.
Then on Friday Donald Trump said that he would like to see the Federal Reserve begin a new QE money printing program.
Such statements tell us where things are ultimately headed and will cause foreigners to get out of the dollar as more money printing comes online.
We’re not at that moment yet, but it’s coming. Trump wants to put Herman Cain on the Fed to yell and demand QE for him!
In time the Federal Reserve is going to be lowering interest rates and beginning a new QE. It doesn’t matter if you think it’s a good idea or not – what matters is to keep on top of what is lining up in the markets.
Another reason the Dollar Index is going down, is because the Euro is about to go up. Why ? Because there will be no Brexit. I live in England and I am convinced that we are heading for a vote on the bad deal that is being put together and no Brexit. No Brexit is the certain response from the British public. The Euro will soar, killing the Dollar.
Another living in England. I voted Remain, I see the benefits either side though. EU needs serious reform. The fear is of the second vote it will alienate so many who will feel the masses conspired against them and for once they were being heard, but got ignored. Scary times. However that has nothing to do with this forum!
Anticipated timing of all of this?
Well there is an EU summit soon (?Next week?) – We have asked for an extension till June 30th. It takes about 24 weeks from what I have read from the start of Legislation being passed, with Royal Assent, to time needed for campaigning etc. Not anytime soon is the short answer. A General Election on the other hand…could be arranged in as little as 6 weeks?
I know a lot of analysts still have the dollar targeting 100 one more time, this would fit in with gold hitting $1240. Maybe this occurs and then the euro after some of this is resolved begins rising again alongside gold/silver in the Fall?
That’s possible Afasilver. Markets tend to anticipate these things though (buy the rumour, sell the news). Once it’s clear that a second vote is going to happen the Dollar will sink. Once the deal is negotiated it’ll go back to a people’s vote because it won’t be what was originally envisioned. The ‘people’ will vote to remain. That’s my view anyway.
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