Wednesday, November 2, 2011

US Dollar Index still heading down

The US Dollar Index rallied last month which produced a high of ~80.43 which is just lower than the 81.31 on 1/10/11.
The US Dollar Index has produced lower highs since 6/7/10 which retains the downtrend as defined by Dow Theory of lower highs and lower lows.  A break below 72.70 should send solid bids for both Gold and Silver. Although this may not happen within the next few months, it may be inevitable with the debt problem that the US has.

I know many people continue to accumulate both Gold and Silver which is one of the best way to retain your capital at this time. I heard David Morgan mention that he expects a top in the PM markets around 2015-2016.  That gives the long term holder another 4-5 years to accumulate before the massive parabolic move when the public buys at just about any price.  When they can't purchase physical Gold or Silver, they may speculate and purchase the Gold and Silver miners pushing them much higher. In a parabolic market, it's best to sell portions of your position as no one can pick the top.  Selling in an 'up' market also guarantees a buyer on the other side.

For those that trade Silver ETF's and miners should watch the end of this month closely. 2 of the last 3 parabolic moves in Silver ended the year on a downtrend.  See the post a few weeks ago with the Kitco 1 year charts of 2004, 2006, 2008 and 2011.

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