The US Dollar or Silver: Place Your Bet / Commodities / Gold & Silver 2020

Over the last 50 years there have virtuallybeen no significant Silver rallies during a period when the US Dollar index hasbeen rising.

If you are betting on a massive Silver rallywhile US dollar strength continues, then you have a very low probability ofsuccess. Similarly, if you bet on a massive Silver rally while the US dollarcontinues a long decline, then you have a great chance of success.

So, for the Silver investor, what the USDollar index might do over the coming years, is a very important question toanswer. No surprise here, since the US dollar has been 100% debased (ofSilver).

There have been two significant Silverrallies in the last 50 years (marked out with rectangles on the chart below).During both of these, the US dollar index was in serious decline.

The chart above, shows the US Dollar indexvs the Silver Price chart. On the chart, I have marked two patterns (1 to 4)that could potentially be similar, and exist in similar context (just after amajor bottom in the US Dollar index).

If the second pattern continues to followthe first, then the US Dollar index will rally significantly over the comingmonths and years.

If the patterns diverge from around thisarea, then the US Dollar index could suffer a significant decline to the point1 area and maybe even lower.

One of the biggest problems with a bullishcase for the US Dollar index is of course the recent enormous monetarystimulus. History shows that the US Dollar index is very likely to be weakafter such a record stimulus. This is despite the big stimulus by the other bignations.

The index could move sideways in the bestcase scenario for a strong Dollar, but is very unlikely to make higher highs.

Another big problem is time. If the USDollar index is to move higher than the black line (by point 2), then it wouldestablish the longest bull market for the US Dollar index since Nixon took theUS of the gold standard. This, in my opinion, makes a US Dollar index rallyvery unlikely.

Despite these reasons and more, there aremany that have the expectation that the US dollar will continue higher, especially given the current economicdistress and the massive deflationary pressures that it created; and with goodreason I would say.

This then sets up the ultimate standoff inthe market, where the resolution will be huge, when it actually happens (eitherway). This is the kind of reaction I would expect Silver to have in any case,in a proper bull market. Not a slow gradual rise, but a very violent move higher.

The standoff is exactly manifested on theSilver chart. The next move will be big and it is coming soon. We are exactlyin the terrain that is conducive to massive Silver rallies.

For more on this, andsimilar analysis you are welcome to subscribe to my premium service. Ihave also recently completed a Silver Fractal Analysis Report as well as a Gold Fractal Analysis Report.

Warm regards,

Hubert

“And it shall come to pass, that whosoevershall call on the name of the Lord shall be saved”

http://hubertmoolman.wordpress.com/

You can email any comments to hubert@hgmandassociates.co.za

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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