Since discovering that the dollar moves in 3-3.5 year cycles, it has really cleared my head and brought some sense into how markets move. No where is this more evident than in the area of commodities and precious metals in particular. When I speak of a dollar cycle, this chart illustrates what I am talking about. The dollar chart below shows the characteristics of these cycles.
When this dollar cycle is finished, so will be the precious metal trade…… for probably a year. Then we do it again over and over until we are using rubles, yuan, or some new world currency we have not yet heard of yet. It has worked every time since the commodity bull market began. The next cycle will be huge.
Today, the dollar quickly fell through the November low. As panic sets in, there will be more transfer of dollars into PM’s which are thinly traded, fueling this parabolic run away move. I have been so wrong on some assumptions, I am beginning to wonder if silver won’t blow through $50 just as easily.
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