Automatically receive the internet’s most informative articles bi-weekly via our free bi-weekly Market Intelligence Report newsletter (sample here). Register in the top right hand corner of this page.
Tracking the direction the USDollar Index is going indicates which way gold and silver prices will likely go. Historically, over the last 50 years, there have virtually been no significant silver or gold rallies during a period when the USDollar Index has been rising – and that is exactly what it is doing these days.
By Lorimer Wilson, Editor of munKNEE.com
There have been two significant Silver rallies in the last 50 years (marked out with rectangles on the chart below from Hubert Moolman). During both of these, the USDollar Index was in serious decline.
That is not the case today. As the chart below shows, the USD Index has been in an unrelenting uptrend for the past 2 years (+3.8%) except for a blip in mid-March.
Silver, on the other hand, despite the recent hype, silver has been slowly declining in price over the same 2-year period (-9.2%).
A look at the USD Index-to-Silver Ratio below shows a choppy trend in which, when the price of silver is low the USD Index to Silver Ratio is high and vice versa.
The bottom line is that the $USD Index is showing no sign of collapse and that is restricting any significant appreciation in the price of silver.
About Lorimer Wilson
Lorimer Wilson is an economic & financial commentator who has written numerous articles on economics, finance, precious metals, and rare earth metals. He is the Editor of munKNEE.com a site that provides a selection of the internet’s best finance articles in an edited, reformatted and abridged format to ensure a fast and easy read. He is also a frequent contributor to TalkMarkets.com, eResearch.com, Gold-Eagle.com, MarketOracle.co.uk, 24hGold.com , silver-phoenic500.com and silverbearcafe.com among others.