Well, it’s about time!
The dollar is AT LAST starting to “show some signs”, as play-by-play guy Marv Albert would say:
At the beginning of this month, we listed 3 reasons the dollar was due to rally. Reason #1 was an intermediate term trend that appeared to be heading up since 2008:
Since putting in a significant double bottom in early-mid 2008, the dollar has trended upwards. We saw another major bottom in late 2009 (a time when pessimism on the buck was rampant – like today). And we’re heading towards a potential bounce off that lower trendline.
This week, we did in fact see the dollar bounce emphatically off this upward sloping trendline:
Since readers have been (rightfully) sending me some playful heckles that the dollar wasn’t going to rally as long as I was writing about it, I actually made it a point of laying low until we saw something new. And this week, we finally did!
With dollar pessimism still at a bearish extreme, this rally could last far longer and go far higher than anyone is anticipating right now. If a powerful dollar rally unfolds, we’d have to assume it’d be accompanied by a pullback in gold and silver – with silver having some significant potential downside, judging by the way it’s been slammed on these big “dollar up” days: