Goodbye Dollar Hello Gold
share
share
share
share
share
Gold silver and PM stocks staged a major breakout yesterday as the dollar cratered to signal the onset of a major devaluation as its loss of reserve currency status becomes a physical reality. The BRICS are set to introduce an alternative CBDC related gold backed currency of their own that should drive the last nail into the dollar’s coffin. This has been “in the works” for quite a while and this being so it only is surprising that it has taken the dollar this long to break down. We saw all this coming a couple of weeks ago in the article PM SECTOR update – REVERSING TO UPSIDE and the two larger gold stocks featured in the article, Royal Gold and Victoria Gold have soared.
Anyway, the point is that the PM sector – and commodities generally – are embarking on a long and powerful upleg that is still in its earliest stages and this being so you can basically put on a blindfold and throw darts at a list of PM stocks and pick winners although of course we will strive to do somewhat better than that.
Now we will proceed to look at a range of charts showing the dollar breakdown and the PM sector breakouts yesterday that I am confident will “make your day” if you are long the PM sector…
We’ll start with the dollar which is of course the cause of the PM sector breakouts yesterday. The dollar cratered yesterday with a breathtaking 1.2% drop in the dollar index which broke it down from the bear Pennant it has been stuck in since late January.…
Meanwhile, the Canadian dollar, in common with many other currencies, broke higher against the US dollar yesterday, although as we can see, it had already started to break higher against the US dollar by the middle of last month. The Canadian economy is much more resource-based than the US and advancing metals prices should have a beneficial effect. Investors in Canadian mining stocks can therefore expect an additional benefit from relative currency appreciation, relative because all currencies are depreciating in real terms, if not against each other…
On gold’s 1-year chart we can see a quite lovely breakout yesterday from the corrective bullish Falling Wedge that brought it back to an important buy spot at the lower boundary of its larger uptrend channel and as we can clearly see, there is ample upside back up to the top of this channel – and there is nothing to say that, given the enormity of what is going on in the world, that it won’t in due course proceed to accelerate out of the top of this channel…
Silver had a big breakout yesterday too and although its uptrend is not yet as strong as gold’s as its larger uptrend channel is converging, it will probably proceed to rectify this in time by busting out of the top of this channel…
The chart for GDX (PM stocks) not surprisingly looks very similar to gold and we can expect a robust by the sector as gold advances. Don’t worry about it having risen a lot yesterday – this chart shows that it has much further to go.
The chart for the Canadian dollar looks strong too, like it is breaking out upside from a long period of consolidation. Its chart will be added to this article later today, so look out for that.
Incidentally there are a string of big white candles in James Turk’s GoldMoney’s chart (XAU.TSX) over the past week, suggesting that investors of piling into physical gold.
Amongst stocks looking good this morning that we will be looking at ASAP are Sierra Madre Gold SM.V that has positive news out this morning and Spey Resources SPEYF is at a very good entry point too. Away from the PM sector Muscle Maker GRIL put in a reversal candle at strong support yesterday and looks set to advance.
********
share
share
share
share
share
Clive P. Maund’s interest in markets started when, as an aimless youth searching for direction in his mid-20’s, he inherited some money. Unfortunately it was not enough to live a utopian lifestyle as a playboy or retire very young. Therefore on the advice of his brother, he bought a load of British Petroleum stock, which promptly went up 20% in the space of a few weeks. Clive sold them at the top…which really fired his imagination. The prospect of being able to buy securities and sell them later at a higher price, and make money for doing little or no work was most attractive – and so the quest began, especially as he had been further stoked up by watching from the sidelines with a mixture of fascination and envy as fortunes were made in the roaring gold and silver bull market of the late 70’s.
Clive furthered his education in Technical Analysis or charting by ordering various good books from the US and by applying what he learned at work on an everyday basis. He also obtained the UK Society of Technical Analysts’ Diploma.
The years following 2005 saw the boom phase of the Gold and Silver bull market, until they peaked in late 2011. While there is ongoing debate about whether that was the final high, it is not believed to be because of the continuing global debasement of fiat currency. The bear market since 2011 is viewed as being very similar to the 2-year reaction in the mid-70’s, which was preceded by a powerful advance and was followed by a gigantic parabolic price ramp. Moreover, Precious Metals should come back into their own when the various asset bubbles elsewhere burst, which looks set to happen anytime soon.
Visit Clive at his website: CliveMaund.com
