Dollar strength ... err weakness and silver

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#1 Sat, Jul 16, 2011 - 2:51pm
Captain Benny
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Dollar strength ... err weakness and silver

We all love watching the US Dollar Index don't we?


This is a rising wedge. We can clearly see there have been more than enough attempts at breaking out to the upside and each one fails pretty horribly. If I were ignorant to the world beyond the DXY, I'd say the dollar looks to be going lower. It may attempt one more move above 76, but when it fails it will be a pretty significant downward move I believe.

I don't believe in seasonality of money, I don't think there is a summer doldrums and I don't think that gold and silver are the same as food crops. Their value remains pretty stable, even with market games controlling price.

Now with both gold and silver showing strength since July started, I'm thinking that the summer heat is catching traders off guard. I think we're about to see a big movement in both metals and also continue to see both the Euro and USD fall relative to other world currencies. Media will try to claim that the pricing​ of gold and silver is caused by uncertainty over the debt ceiling issues in the US, but I know, from experience, that the MSM is chock full of a bunch of retards who regurgitate what they're told from their so called "experts" that are wrong more than they're right. The breakout in both gold and silver is going to catch almost everyone off guard. Prepare accordingly.

Now this is what I really want to point out:

This is a falling wedge. This is what happens when a breakout occurs. It often breaks upward, unlike the rising wedge which tends to break downward (see DXY above).

We've got a lot of fun starting to unfold in front of us this month. Silver is about to run to new highs and it won't be looking back very often. I don't know how many of you people have followed TF very long, but I successfully called the January bottom and got dang near close to the May raid bottom (which was one wild and unpredictable event!) Here is a visual of what I called and the link to those posts:

January bottom call: https://tfmetalsreport.blogspot.com/2011/01/sour-grapes.html#c6984107088021211792

May 5th bottom call: https://tfmetalsreport.blogspot.com/2011/05/cinqo-de-bottomo.html#c1302480132079012810

Now, if only my wife would let me acquire more silver...

Edited by: Captain Benny on Nov 8, 2014 - 5:09am
Sat, Jul 16, 2011 - 2:57pm
Captain Benny
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Bringing it together...

I don't think I tied the two charts together very well. Here's more explanation:

We already ​have a breakout in silver. That point is clear from the chart above. We are extremely close to a breakdown in the DXY, I don't think many people are aware of that. When you coupple the two together you get a weaker dollar, which means higher prices for pretty much everything, silver included. With silver's breakout already ongoing, its already increasing in value versus the USD on its own merits, so when you tie a dollar value reduction in its pretty clear that silver is about to shoot through the roof.

Cheers!

Sat, Jul 16, 2011 - 4:26pm
Dr Durden
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Nice analysis, Benny. What to

Nice analysis, Benny.

What to you make of the risk trade all together, though? As I see it, PM's and equities UP, POSX down = risk on. PM's and equities DOWN, POSX up = risk off. Isn't this the same as saying the old green back is "safe" in some sort of twisted way?

Would you say this still a pretty reliable trend going forward or have we broken it?

Got GIABO? "It's called the American dream, because you have to be asleep to believe it." ~George Carlin
Sat, Jul 16, 2011 - 5:18pm
Captain Benny
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Re: Dr Durden

A little disclaimer first: I don't do risk-on/risk-off trading

Regarding the risk-on/risk-off trading, I think we're seeing the conclusion of that trade. The inverse relationship you noted between the USD and equities may remain intact (I think it will). But I also think metals are breaking away from this trade and are not going to be so closely associated with equities. With that said, if we see a large​ drop in equities, there may be some drops in the metals as equity margin calls would cause forced selling in the winning investments. These would in fact be very ​small​ movements in the price of the metals.

Gold and silver are so under owned, that there really are not that many people that would even be able to sell it since they don't own it to begin with. If the equities market does drop, the media will publish plenty of articles explaining that gold and silver "sold off" because of margin calls elsewhere... but just because some babbling journalist writes it down doesn't mean its true. Any sell off in paper metals will be strongly bought in the physical markets. I have no doubt that the EE will try to leverage off an existing small drop in metals and attempting another raid like what we've already seen. Ultimately it will fail. I see $60 silver by year end.

Back on the old site, there were a number of posts where I made ​very strong recommendations to maintain a hedge against your long silver positions by synthetically shorting the equity indices. Specifically, I recommended inverse ETFs against said indices or put options on the indices. I still recommend this kind of hedge if you're playing with silver in the paper world.

Sat, Jul 16, 2011 - 8:18pm (Reply to #4)
Dr Durden
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Captain Benny wrote: Back on

Captain Benny wrote:

Back on the old site, there were a number of posts where I made ​very strong recommendations to maintain a hedge against your long silver positions by synthetically shorting the equity indices. Specifically, I recommended inverse ETFs against said indices or put options on the indices. I still recommend this kind of hedge if you're playing with silver in the paper world.

Already in place, mofo. 

Nowthen, lets get this road on the show!

Got GIABO? "It's called the American dream, because you have to be asleep to believe it." ~George Carlin
Mon, Jul 18, 2011 - 9:52pm (Reply to #5)
Captain Benny
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Holding tight

That long silver and short indices trade is working out quite nice today. I still think we'll see a dead cat bounce of the DXY going into this debt ceiling panic... Make no mistake that people will freak out and psychologically have their little freakouts when they channel surf off American Idol and over to the evening news. They won't know what is going on or how they should react, so they'll have their little panic attacks and quickly change back to American Idiot for bloopers. This is just a warm up for when the real panic sets in as what they believe to be money... the paper they have trusted their whole lives... depreciates relative to goods and services.

The pain is just barely starting and its a sad sad time.

Now check this out that was just posted to ZeroHedge:

I highly recommend reading the comments to this as it shows what I've been saying all along...


Source: https://www.zerohedge.com/article/guest-post-gold-and-stocks-love-inflation-right

Fri, Jul 22, 2011 - 2:28am
Captain Benny
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Breaking trend ?

Looks like the DXY chart has possibly now broken out to the down side... lets see what happens over the next week! This will be one crazy breakout if confirmed! If it goes lower than 74, I'd say it is confirmed.

Tue, Jul 26, 2011 - 7:47pm
Captain Benny
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More attention being drawn to the charts above

Finally others are waking up to what I said 10 whole days ago... *sigh*

https://www.zerohedge.com/contributed/fed%E2%80%99s-killing-us-dollar-behind-scenes

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