The US Dollar Is at a Make-or-Break Point

I'm traveling to Washington, D.C., this week to present my best case for a new publication to cover precious metals miners, developers and explorers. We'll see. In the meantime ...

The U.S. dollar enjoyed a nice rally last week. But unless it can break out this week, the rally is probably done.


(Updated chart)

I would keep the following points in mind ...

• Fed officials have warned that markets are "wrong" to expect just one rate hike for 2016. 
• CPI data comes out on Tuesday, and inflation probably strengthened in the last measured period.
• FOMC minutes from the April meeting come out on Wednesday.This will be scrutinized for hawkish speak that indicates a June or July rate hike is imminent.
• Goldman Sachs says the oil bear market is "over" due to falling U.S. production and chaos in select OPEC members.

However ...

• Economic numbers out of China are downright lousy.
• Earnings for S&P 500 continue to deflate. This is due in part to a too-strong U.S. dollar.
• What's more, headline earnings cover carnage in GAAP earnings. For example, Adjusted net income at S&P 500 companies rose 6.6% to $840 billion last year. Under GAAP, income at those same companies actually declined 11% to $562 billion.

The wild card is we'll see actual economic growth numbers (or lack of growth) for Q2 this week. That might tip the Fed's hand.

If the dollar does continue to rally, we might get the buying opportunity in gold that everyone has been waiting for. On the other hand, gold miners are one of the few things working in the market now, so there might not be as much of a dip as some anticipate.

Good luck to us all, and good trades.

Gold Miners & Silver Miners Leave S&P 500 in the Dust

A performance chart for gold, gold miners, silver miners and the S&P 500.


(Updated chart)

There is always a bull market somewhere, right?

Check out this chart from StockCharts.com for XRA

This chart I did on XRA back in April worked out well. Huzzah for technical analysis.

$GOLD Charts a Course for Higher Prices

It sure looks like we're seeing an inverse head-and-shoulders pattern developing in $GOLD. My target is $1,474.



(Updated chart)

For an inverse head and shoulders pattern to work, heavy volume on the breakout through the neckline is a must. And that’s just what we’re seeing now. Remember, “volume should move with trends, not against them.”

After breaking neckline resistance, the price target is found by measuring the distance from the neckline to the bottom of the head. This distance is then added to the point at which the pattern breaches the neckline to reach a price target. Any price target should serve as a rough guide. Other factors (previous resistance levels, etc) should be considered.

They say “every sunken ship has a chart.” So don’t bet all your pin money on this.

On the bright side, chart analysis CAN be an indicator of potential price action. As a reminder, here’s the chart I sent around in February, when the gold bull market first started.

We'll see if it works out this time. A weaker dollar certainly helps gold go higher, and I made the case for the dollar going much lower in a previous post.

Good luck and good trades.