As a corollary to a higher Dollar, it is my expectation that precious metals
will be under pressure.
For example, I have had a sell signal on the SPDR Gold Trust (symbol: GLD) since
January 11, 2010. Gold still remains in a secular bull market, but on
the weekly time frame that I function on, technical studies suggest an opportunity
to buy at lower prices. GLD should test the $104 to $105 area, which are
the lows of the negative divergence bar on the monthly chart.
If gold will be weak, then the Market Vectors Gold Miners ETF (symbol: GDX)
will be under pressure as well. See figure 1 a weekly chart of GDX. The head
and shoulders top is identified and this week's price action is breaking below
the neck line of this price pattern. In the context of a higher Dollar, I would
expect lower prices from this volatile issue.
Figure 1. GDX/ weekly
The i-Shares Silver Trust (symbol: SLV) looks "less" bad than GLD
or GDX, but with a higher Dollar, there will be downside pressure. See figure
2 a weekly chart of SLV. The cluster of negative divergence bars implies a
trading range. Support is at $17.
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