Tuesday , 10 December 2024

Any Further Weakness In U.S. Dollar Would Signal Acceleration Of Downtrend – Got Gold?

The U.S. Dollar Index has fallen through support at 80 once again. If this current decline trend continues it willdollar-worm-hole drop below 79.20 for the first time in nearly two years. This could pave the way for a deeper decline below the 76 level and signal a continuation of the downtrend that started in 2002.

The following article is presented courtesy of Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and   www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.

Click on Facebook for latest articles on gold/silver & economic/financial matters from munKNEE.com

Click on Twitter for latest tweets from munKNEE.com

Click here to subscribe to the FREE Market Intelligence Report newsletter (sample here)

Hamlin goes on to say in further edited excerpts:

Gold bugs have been anticipating a dollar crisis for quite some time and, while a full scale collapse has yet to materialize, the dollar has lost significant value against most other assets in the past decade. In recent years, however, the dollar has held up remarkably well against other currencies.

The U.S. Dollar Index is a measure of the value of the U.S. dollar relative to its most significant trading partners. More specifically, the USD index is calculated by factoring the exchange rates of six major world currencies:

  • the euro,
  • Japanese yen,
  • Canadian dollar,
  • British pound,
  • Swedish krona and
  • Swiss franc.

The index started in 1973 with a base of 100 and is relative to this base. This means that a value of 120 would suggest that the U.S. dollar experienced a 20% increase in value over the time period. The current value of 80 suggests the opposite, a 20% decrease in value.

The U.S. Dollar Index: A Deceptive Indicator of USD Strength

The dollar has been in a bear trend since the start of 2002…[with] the dollar index losing nearly half of its value, dropping from 120 towards 70 but, since 2009, the dollar has been consolidating within an increasingly tighter range. This action has created a symmetrical triangle pattern over the last six years, with the USD straddling the 80 level.

USD LT

The symmetrical triangle [above] is a continuation pattern that signals a period of consolidation in a trend followed by a resumption of the prior trend. In this case, we can forecast a resumption of the downtrend that has been in place since 2002.

Zooming in a bit, we can see the significance of support around the 79.20 level. This support has held up on five separate occasions since late 2012.

USD Breakdown

The current downtrend has been in place for well over a year and the USD has fallen through support at USD 80 once again. [While] this fact alone is not technically significant, as the USD has fallen below 80 on multiple occasions in the past few years, this time there has been a series of lower lows in place since December of last year. If this current decline trend continues, the USD will drop below 79.20 for the first time in nearly two years…could pave the way for a deeper decline below the 76 level, which would signal a continuation of the downtrend that started in 2002.

Backing up this technical forecast is the fact that…much of the world is turning away from the dollar in international trade, preferring bilateral trade agreements in local currencies…and this has been increasingly bearish for the U.S. dollar in the past year. Most recently, it was the announcement of a high-profile deal by Gazprom, the Russian state-backed gas giant, which signed a $400 billion, 30-year deal to supply gas to China. Russia’s pivot East, has the potential to further undercut the domination of the U.S. currency.

Will May 20th Go Down In History As the Day the U.S. “Petrodollar” Monopoly Was Finally Shattered?

Singapore – China Agreement Yet Another Sign of Ongoing Decline In U.S. Dollar

Shift From U.S. Dollar As World Reserve Currency Underway – What Will This Mean for America?

As global demand for dollars declines, other currencies stand to benefit – but the biggest benefactor will be real money, gold and silver, which have been breaking out recently and have plenty of upside remaining. Those seeking maximum gains may also want to consider owning shares in the companies that mine these appreciating assets. The best-in-breed mining stocks are likely to offer significant leverage to the increase in the gold and silver price going forward.

Are Stock Market & U.S. Dollar About to Crash? Will Gold Be the Major Benefactor?

Gold Setting Up To Bottom; U.S. Dollar Setting Up to Crash

The USD & U.S. Dollar Index – What Affect Are They Having On the Price of Gold?

The gold bull just finished an extended slumber and looks ready to make another run higher. Whether this move takes gold to our technical price target of $3,600 or John William’s inflation-adjusted forecast of $8,890 remains to be seen.

More importantly than how gold performs priced in fiat money, is how gold performs against other real assets. We believe gold will not only protect you from the inflation that has recently spiked higher, but will vastly increase your purchasing power over time.

Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://www.goldstockbull.com/articles/dollar-breakdown/ (Copyright © 2014 Gold Stock Bull – All Rights Reserved. Most of the mining stocks that we track are up 25-35% year to date, with a few of our favorite picks up more than 60%. If you would like to view the Gold Stock Bull portfolio and receive our top-rated newsletter, click here to get started for just $99!

Related Articles:

1. Will May 20th Go Down In History As the Day the U.S. “Petrodollar” Monopoly Was Finally Shattered?

The struggle over Ukraine has caused Russia to completely re-evaluate the financial relationship that it has with the United States. If it starts trading a lot of oil and natural gas for currencies other than the U.S. dollar, that will be a massive blow for the petrodollar, and it could end up dramatically – and negatively – impacting the average American’s current standard of living. Let me explain. Read More »

2. Are Stock Market & U.S. Dollar About to Crash? Will Gold Be the Major Benefactor?

Something is clearly out of whack. Gold has failed to push higher against the backdrop of a lower U.S. dollar for the first time in over a decade and, with pressure on the dollar increasing, the failure of support could ignite a massive decline. Is gold preparing to launch this time? Read More »

3. Where Does Your Country’s Currency Rank?

Below is the list of the top 10 strongest currencies in the world, as measured by their percentage of the foreign trade market based on their combined interest in the world’s 3 foreign exchange markets. Read More »

4. Is the U.S. Dollar Still on Top? If Not, Who Really Has the Most Valuable Currency?

Do you think the USD is still on top? What makes a currency strong isn’t necessarily what makes it popular or valuable, as you’re about to read. Read More »

5. The U.S. Dollar Will Collapse When This Upcoming Event Happens

If we want to better understand the answer to the elusive question of “When will the fiat US dollar collapse?”, we have to watch the petrodollar system and the factors affecting it. Read More »

6. Which Is the World’s Safest Major Currency – You’ll Be Surprised

The term ‘safe fiat currency’ is as intellectually disingenuous as terms like ‘fair tax’ or ‘government innovation’ but, as we’ve been exploring recently why modern central banking is completely dysfunctional, it does beg the question– is any currency ‘safe’? Let’s look at the numbers for some data-driven analysis. Words: 575 Read More »

7. Singapore – China Agreement Yet Another Sign of Ongoing Decline In U.S. Dollar

Finance executives in Asia see the writing on the wall. They can see that the dollar is in a period of terminal decline, and that the Chinese renminbi is going to take tremendous market share away from the dollar – and they want a big piece of the action. To that end representatives of the Hong Kong Exchange and the Singapore Exchange, THE two dominant financial centers in Asia, have signed an agreement to combine their forces in rolling out more financial products denominated in Chinese renminbi. This has massive consequences for the global financial system – and the future of the U.S. dollar. Read More »

8. Gold Setting Up To Bottom; U.S. Dollar Setting Up to Crash

The next black swan is already staring us in the face. It’s out of control currency debasement and it’s going to be a collapse in the purchasing power of the US dollar. [After all,] does anyone seriously think that we can print trillions of dollars out of thin air for five years and not eventually have something bad happen? Read More »

9. Shift From U.S. Dollar As World Reserve Currency Underway – What Will This Mean for America?

Today, more than 60% of all foreign currency reserves in the world are in U.S. dollars – but there are big changes on the horizon…Some of the biggest economies on earth have been making agreements with each other to move away from using the U.S. dollar in international trade…[and this shift] is going to have massive implications for the U.S. economy. [Let me explain what is underway.] Words: 1583 Read More »

10. The Collapse of the U.S. Dollar is Unavoidable! Here’s Why

The mother of all collapses is still in front of us. Below are my reasons why that is the case and how to protect yourself financially from such an eventuality. Read More »

11. The USD & U.S. Dollar Index – What Affect Are They Having On the Price of Gold?

The U.S. Dollar Index is made up of a basket of [6] currencies that are, themselves, not static and, indeed, are involved in various forms of debasement as nations have taken the view that a weaker currency will boost their exports. As each nation enacts such policies, the result is gridlock, as every action taken to weaken one’s currency is neutralized by a similar action taken by the competing currencies. That is currently what is happening with the constituents of the U.S. Dollar Index and why, as such, the U.S. dollar has not weakened. [Given the fact that] gold tends to have an inverse relationship with the dollar, and has increased when the value of the dollar has declined, we could, as a result, continue to see a capping in the advance of gold prices, at least in dollar terms. [Let me explain in further detail.] Words: 804; Charts: 1 Read More »

12. The U.S. Dollar Index: A Deceptive Indicator of USD Strength

Most of the major financial news outlets and many investors have come to rely on the movements of the U.S. Dollar Index as a daily barometer of the U.S. dollar’s relative strength and weakness taking it on faith that the Dollar Index is the dollar – pure and simple. In reality, the Index offers a very distorted view of the movement of the dollar against the currencies that matter most. If anything, recent movements of the Index are a reflection of euro weakness rather than dollar strength. Words: 1019 Read More »