Sometimes it pays not to get distracted by the daily gold and silver price today action and remind yourself why we are in an MASSIVE Gold Bull Market.
What does the Dollar Index Index 80 level mean?
Take a look, you decide?
Chart 1- US Dollar Index looking up at the abyss
The Dollar Index (a trade-weighted Index of the US Dollar vs. all major currencies) is at the edge of a cliff.
There is no fresh air lower than 80. It has never been breached in the history the currency. Some argue that the index is now a different composition and that it would have been underwater if it were based on the oldweightings. It could be. But traders are quick to interpret charts.
Intermarket parlance identifies a positive correlation in Bond Prices with the US Dollar. This means that if interest rates are higher, the Dollar will fall. Is it that easy? The catch is, however, that it’s simple to trade. There is a significant, changing time lag that must be taken into account. The Dollar was at its peak around 2002. Only mid-2003 saw the ultimate low of interest rates.
Inflation rates will continue to rise as the Dollar deteriorates (despite the machinations of Asian Central Banks who recycle Dollars into US Bonds in an attempt to keep rates artificially low). The market forces ultimately prevail and the trend is towards higher interest rates.
Real tangible assets offer a valuable counterbalance to financial paper assets such as Bonds and Dollars. You should prefer to own assets that are not financed with debt (Realty and Industrial Metals), and that are not economically sensitive (Oil and Industrial Metals). Our favorite is Gold!