The dollar broke sharply lower Friday and closed below the September 90.99 low. Breaking that low, in our opinion, confirms a new bear market in the dollar. Our cycle work suggests the dollar should trend lower into 2023/2024.
A multi-year dollar bear market should propel gold and silver to new all-time highs. I reinforced my core holdings in December and took out initial positions in JNUG and USLV. We changed the color codes and added to miners on Tuesday (see report), and then USLV on Friday.
Metals and Miners are likely embarking on a healthy uptrend. I need to see how the structure develops. But for now, I plan on holding half of the JNUG and USLV positions long-term (partial core position). I may attempt to time the 6-month cycles with the remaining half. Note: JNUG and USLV are leveraged trading vehicles, and I’m not sure how they will preform long-term; I’ll keep a close eye on them.
The stock market and oil are rising without pause. Both are due for an interim top and meaningful correction. Trying to pick a top in an extended move is enticing, but dangerous. Powerful uptrends can persist much longer than most expect. Precious metals and miners should exhibit similar, relentless type behavior in the coming years. And that is why it’s essential to have and keep a core position.
The US Markets are closed Monday.
-US DOLLAR BIG PICTURE- The Dollar peaked in 2017, and if history is a guide, prices should remain weak into 2023-2024. The Dollar has formed major bottoms every 16-years. Precious metals should reach new all-time highs as the dollar declines.
-US DOLLAR WEEKLY CHART- The dollar closed the week below September’s 90.99 low and confirmed a new bear market. Prices should remain weak until 2023-2024. This development is excellent news for precious metal investors.
-GOLD WEEKLY- The 4-year base is intact, and prices are poised to breakout above $1,400. Prices should at least test the $1,500-$1,550 level in 2018. Our long-term forecast anticipates a breakout to new all-time highs around 2020.
-DEVELOPING UPTREND- Now that the basing period is over, gold should establish a clear uptrend. Prices should remain above the 200-week MA, and each 6-month low should be higher than the last. Frequently, the 6-month lows bottom between the 20 and 50-week EMA’s. The 2008-2011 uptrend is an excellent illustration. Consider adding to your core holdings at 6-month lows.
-GOLD DAILY- Prices only pulled back to the 10-day EMA before breaking higher. We could see some choppy price action, but the 20-day EMA should support prices. This daily cycle should trend higher into February before declining into the next cycle low.
-SILVER WEEKLY- Prices are coiled, and I think we could see an explosive move in 2018. First, we have to get above the blue trendline (neckline).
-SILVER DAILY- It looks like the pullback ended at $16.88. We should see another surge toward the blue trendline. I’m keeping a close eye on silver. I expect an explosive move higher sometime in 2018.
-GDX- Prices gapped higher and exploded to fresh highs on significant volume. More times than not, prices come back to fill open price gaps. Nevertheless, it looks like prices will rally and test the $25.38 high before this daily cycle tops.
-GDXJ- Juniors also gapped higher, but prices closed below the $35.17 high. Prices could drop to fill the gap, but the $33.18 low should hold.
-JNUG- I bought more JNUG on Tuesday at $16.59. If prices come back to fill the gap, I’ll consider adding the final tranche. Otherwise, I’m content with my current allocation.
-USLV- I bought more USLV at $11.86. If prices pullback I’ll add the final tranche.
-SPY- Still no sign of a top. Prices are overdue for a correction. However, it’s important to note that dominant uptrends can persist much longer than most anticipate. Attempting to short can be dangerous.
-WTIC- Prices rebounded Friday, and it’s unclear if prices topped. I should have waited for a confirmed swing high before attempting to short oil.
-SCO- I think we are very close to a bottom in SCO and top in oil. I tried to pick another bottom, and it looks like I might get stopped out again. I’ll monitor the action carefully and update when the market reopens Tuesday.
Have a safe and pleasant weekend.