The US Dollar Or Silver: Make Your Choice

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Over the last 54 years, there have been virtually no significant silver rallies during a period when the US Dollar Index (DXY) was rising. If you are expecting a massive silver rally while US dollar strength continues, you will have a very low probability of success.

In fact, the most significant silver rallies occurred during a period when the DXY was declining. For this reason, the direction of the DXY is an important signal for silver bulls. Below is a chart that shows how the significant silver rallies happened during a time when the DXY was in decline:

(Click on image to enlarge)

Silver vs USD


After the longest DXY rally since 1971, the US dollar was still not able to surpass its 2001 high and is now hovering near a very important level. Below is a DXY chart showing that important level (the double blue line):

(Click on image to enlarge)

Notice how the DXY broke down at the double blue line, close to a multi-year silver rally in 1977 and 2003. It is likely setting up another one of those breakdowns, which will be a great signal for the silver bull market.

Another major leg down would also complete the regulation pattern of three major moves down (ending at point 5) before a new cycle. This is certainly consistent with a US debt default looming.


More By This Author:

Debt Collapse And Monetary Reset
Silver Price Forecast: Trumpeting The Jubilee
Why This Year Could Be A Big One For Silver

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