US Dollar Breaks Below 90 – Continues To Confirm Depreciation Cycle Phase

If you’ve been following my recent research posts, you already know my research team and I are expecting some very big volatility and trends in the US and global markets over the next 12 to 48 months. 

The US Dollar Index fell below a critical support level above 90 recently. This move lower after attempting to bottom in early 2021 suggests our broad Appreciation/Depreciation cycle phase research is continuing to play out. This means we should start to prepare for bigger trends, more volatility, and the potential for broad market price rotation over the next few years.

You Can't Fight the Market Tides - Get Ready for the Depreciation Cycle Phase

These broader market cycle phases act like lunar phases in ocean tides. There are always smaller waves that lap at the shore continually, but there are bigger trends, the lunar cycle trends, that drive larger excess tidal highs and lows.

The global markets work in much the same manner with the longer-term Appreciation/Depreciation cycle phases (which usually last about seven to nine years in length). When we are in an Appreciation phase, precious metals fall out of favor as global traders and investors pile into strong global equity market trends. When we are in a Depreciation phase, precious metals tend to trend higher because global market volatility, a declining US dollar, credit market, and other concerns drive traders into more protective/hedging positions.

In short, the transition from a general market Appreciation cycle phase, which we believe ended in late 2019, into a new general market Depreciation cycle phase suggests the following general trends will take place over the next five to seven or more years and will likely prompt the following types of price trends:

  • Precious metals should continue to rally as broad market economic and credit market concerns become elevated.
  • Larger price volatility and bigger price rotations will likely drive traders to become more cautious of the “buy and hold” type of passive investing. These bigger price swings and how they relate to sector trends will create a true “trader's marketplace.”
  • Commodities usually rally to a peak near the end of an Appreciation cycle phase.
  • Generally, global equities markets attempt to reprice true value within a Depreciation cycle phase. This happens because the end of the Appreciation cycle phase usually prompts a “euphoric rally” type of extreme peak. After that peak exhausts, the transition into the Depreciation cycle phase usually consists of a “revaluing price phase” which is followed by an ultimate bottom, then the start of a reflation phase.
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Comments

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James Hanshaw 3 weeks ago Contributor's comment

The US likes to call others currency manipulators yet lets its sink constantly lower

Harry Sinclair 3 weeks ago Member's comment

What do you mean?

James Hanshaw 3 weeks ago Contributor's comment

Not long ago the US labelled Switzerland - among others - as a currency manipulator. Switzerland has the strongest currency in the world and only tries to stop it appreciating even more against ever depreciating currencies like the euro and USD.

A manipulator is usually applied to countries that try to lower the value of their currency. The USD is a long term decliner against the SFR; https://www.tradingview.com/symbols/USDCHF/