Dollar Cycle

By: Toby Connor | Wed, Apr 20, 2011
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For many months now I've been warning we were going to have a dollar crisis and that dollar crisis would drive the final leg up in gold's ongoing two year C-wave advance. We are now on the verge of the panic selling stage of this three year cycle.

On Monday the dollar briefly rallied on the S&P downgrade of US debt (who knew?). That had the potential to mark the bottom of the current dollar cycle. But by this morning the dollar has given back all of those gains and then some.

I've noted in the premium report that the dollar's daily cycle often turns on the employment report at the beginning of each month. The previous cycle bottomed one day after the March report and the current daily cycle topped on the April report.

$USD Index

If this pattern continues then we can probably expect the current dollar cycle to stretch for another 2 1/2 weeks into the May report (give or take a day or two either way).

I seriously doubt gold is going to suffer any meaningful correction as long as the dollar is in free fall, so I expect we are going to see the gold cycle stretch also.

If the dollar does continue lower into the May employment report before putting in the cycle low it would then be set up for a more normal duration decline into the final three year cycle low due on or around the June report.

$USD Index

However with the dollar losing it's chance to rally here gold and especially silver are now at risk of entering a runaway rally.

Details in last nights subscriber report.

 


 

Toby Connor

Author: Toby Connor

Toby Connor
Gold Scents

Gold Scents is a financial blog focused on the analysis of the stock market and the secular gold bull market. Subscriptions to the premium service include a daily and weekend market update emailed to subscribers. If you would like to be added to the email list that receives notice of new posts to Gold Scents, or have questions, email Toby.

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