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Silver is at a critical point based on U.S. dollar action

Commentaries & Views

Previously, I have shown how  there were virtually no significant Silver rallies over the last 50 years during a period when the US Dollar index has been rising.

Betting on a silver rally when the US Dollar index is in decline makes for great odds. There have been two significant Silver rallies in the last 50 years (marked out with rectangles on the chart below). During both of these, the US dollar index was in serious decline.

Below, is an updated chart previously featured:

The chart above, shows the US Dollar index vs the Silver Price chart. On the chart, I have marked two patterns (1 to 4) that could potentially be similar, and exist in similar context (just after a major bottom in the US Dollar index).

If the second pattern continues to follow the first, then the US Dollar index will rally significantly over the coming months and years. If this happens, silver prices would likely be crushed.

If the patterns diverge from around this area, then the US Dollar index could suffer a significant decline to the point 1 area and maybe even lower. This would likely bring a silver rally similar to the late 70s.

Since the previous update, the US Dollar index has now fallen to the red dotted line. The US dollar is beginning to suffer for the massive stimulus package earlier in the year. A breakdown at the red dotted line is a big step to confirming a US dollar index bear market and the current pattern diverging from the 90s pattern.

Silver is already looking really good after an important breakout last week. A breakdown of the US dollar would be a great confirmation of a sustained silver rally.

Silver is at a very important point in its economic life cycle, from a short-term and long-term view. If we get the right confirmations over the coming weeks and months, silver will likely have a massive multi-year rally:

For more on this and this kind of fractal analysis, you are welcome to subscribe to my premium service. I have also recently completed a Silver Fractal Analysis Report as well as a Gold Mining Fractal Analysis Report.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.