US Dollar Analysis
- The US government is spending approximately three dollars for every one dollar taken in. You are told this is being done to create “economic recovery”. Houston, we have a US dollar spaceship problem, because there is no balance sheet recovery.
- The people in power believe massive spending and borrowing more will heal this epic debt problem. Look at my US dollar chart above. Over the last year you can see that quantitative easing is invisibly stealing money out of American bank accounts. The most recent rally attempt of the dollar was pathetic, and a dramatic decline is near.
- This is not the 1970s. What is missing this time is wage inflation that attempts to keep pace with price inflation. Government austerity has to come. Payrolls will be reduced. Tax receipts have plunged, yet government spending is going through the roof in the name of recovery. My advice for months has been to hold metals… outside the banking system.
- Look closely at the technical comparison on the US dollar chart between the current price and volume action, and the action late in the year of 2007.
SGOL (Gold Bullion Proxy) Channel Overshoot Chart
- My time target for the next meaningful gold rally is late June. The price channel overshoot on the above SGOL chart to $156.50 indicates gold bullion should rise to $1700 very quickly. The current lack of price weakness in bullion is stunning, and a powerful harbinger of higher prices to come, across the precious metals price board.
- When a market is in a natural season of correction and consolidation, like gold is now, and instead it meanders higher, that is very bullish technical action.
- Most important for many of you will be the effect this projected gold price rise will have on gold stocks. I expect a tremendous move to the upside in gold stocks, fuelled by enormous short covering action.
- I think I’ve been clear and consistent with my roadmaps for the dollar, gold, and gold stocks and over the past month I’ve personally invested more heavily in gold stocks than at any point in my lifetime. If I’m wrong about the super bull move in gold stocks that I believe begins within weeks, I’m fully prepared to eat my share of financial crow. I won’t liquidate. I’ll take the pain alongside you.
