Gold Is Ready For Takeoff
Gold Is Ready For Takeoff by Scot Macdonald – Seeking Alpha
Our analysis shows that the dollar is potentially beginning to confirm that we have made some sort of a short-term to intermediate top.
I am doing this special report because the VC PMI strongly suggests that we are at a significant turning point for the dollar and precious metals.
Gold has been trading in the $1300 to $1310 area for the past few weeks, and has established a major reversal to the upside on close above 1325.
US Dollar: Short-Term Top
In this intra-week special report update I want to review the US dollar, which is currently trading at 92.59, down 20 or 30 points. Our analysis shows that the dollar is potentially beginning to confirm that we have made some sort of a short-term top. In previous articles on Seeking Alpha, I have argued that the US dollar has been in a major down trend, as you can see from the long-term charts dating back to 1971. More recently, we have established some kind of a bottom around 88.50 for several months, particularly since the beginning of 2018. What we saw here was a breakout above the 90 area, which activated the uptrend and potentially a swing rally to the current levels in the 93.20 area. The high as of May 9 was 93.26.
The Variable Changing Price Momentum Indicator (VC PMI) automated algorithm, which we use to identify major turning points in a range of markets by calculating the extreme volatility of a given market, identifies specific pivot points at which day, swing and long-term traders can enter and exit the market. We have applied the VC PMI to the dollar, as well as many other markets.
I am doing this special report because the VC PMI strongly suggests that we are at a significant turning point for the dollar and precious metals. I believe that we are a point where events and trends are going to have major implications, especially since President Trump cancelled the Iran nuclear deal, increasing the risk of a conflict in the Middle East and causing a tremendous uncertainty in the crude oil market, with the price reaching over $70 a barrel. This is not a good change for the world economy. Crude oil trading above $70 is another indication that we are beginning to see inflationary pressures begin to build up in the global economy. Depending on how long oil trades above $70 and how high interest rates rise, with the 10-year Treasury Note now above 3% and US monetary policies driving interest rates higher in the face of record levels of global debt, particularly in the US, which exceeds 100% of GDP, it is a really difficult scenario to accept that all of these economic and geopolitical policies are going to have a positive effect on the world economy. We are already beginning to see deterioration taking place based on some of the economic numbers that came out last week.