The Dollar Will Be Sacrificed And Gold Will Soar

This isn’t 2008.  Those that are expecting fireworks for the U.S. dollar if this bear market continues are in for a rude awakening.  The setup for the dollar is completely opposite to what happened leading into it’s mega run in 2008.  Let me explain.

The dollar was approaching a 3 year bear market heading into late 2008 as the stock market was beginning to crash.  And the bears were out in full force proclaiming the death of the dollar right at the bottom.  Being a dollar bull at that time in 2008 was totally contrarian after a 6 year overall bear market in the dollar, but it was the exactly right position to take.

dollar

This time the dollar has been going up for 3+ years, and is actually late in a cyclical bull market and ready for a top.  Sentiment is dollar bullish now after the dollar has not made a major new low for 6 years since 2008.  Discussion of King Dollar being back has been all over the Internet recently when it made a big surge higher.  In reality it’s more likely the dollar is overdue for a major top and could be headed for a new bear market shortly.

Some might say that the big surge higher in the dollar recently is proof that the dollar is ready for a new bull market.  The problem with that narrative though is the fact that markets tend to make false moves before they make big trend changes, as they fool people right at the end of their move.  Two examples of this were what happened with gold and oil in 2007 into 2008 as the stock market transitioned into a bear market.

Gold and oil actually bucked the trend of the stock market and went higher into 2008 as stocks had already topped.  And they didn’t just make minor moves higher, they made big moves higher with oil making a crazy parabolic spike higher right before stocks got crushed.  So there is precedent for extreme false moves right before bear markets begin and I think it’s quite possible what we just witnessed in the dollar was another example of this.

gold

oil

The story for gold right now is very similar to what happened with the dollar in 2008.  Everyone is bearish at the bottom after a 3+ year cyclical bear market, and nobody expects a major move higher.  Market participants are actually positioned for the exact opposite thing to occur in a big way.  Small speculators in the futures markets were recently the most net short they’ve been of gold in the last 13 years!  Gold is actually overdue to start a bull market and take everyone by surprise just like the dollar did in 2008.

5 thoughts on “The Dollar Will Be Sacrificed And Gold Will Soar

  1. Lets HOPE the Authors correct – Makes sense & Gold is my major Investment in a big way.

    It would be an even better Article if the Author was Identified – along with their credentials. Thanks

  2. I believe that your analysis is correct. The question is the timing. For some time I have been expecting gold to start making a bull run upward and it hasn’t happened yet. No doubt partly because of the government and banks influence on the dollar and gold prices. The question is when will this break and allow the price of gold to resume upward.

  3. Dear sir:
    Thank you for the analysis. I remember there is gold to oil ratio about 10 to be normal. Now gold/oil is around 14. Given the desire for US to punish Russia or desire to break Russia’s economy, US and Saudi worked together to flood the oil market to push oil price down, and we see from Houston that oil price will be going to 70s or briefly 50 minus just to break Russia, force Putin to give up. If this plays out as we see, then Houston will suffer as it is the oil and gas capital, and gold will go down to 800 to satisfy the gold/oil ratio, and dollar will rise much more. The US economy, actually, will be in better shape as oil is a cost to the general or overall economy, and this helps US and China and EU, but oil exporters like middle east and Russia will have the pain with Russia feeling the most. Is this going to give US another 10 years plus economic prosperous time? I am sure the middle east will say again US is stealing their oil if oil price goes to 50 minus for a few years. Does this give rise more terror excuse? Will Russia will break up like Soviet Union? I know it is fool’s game to predict future as only time will tell. We know the consequence, side effects, but not the un-intended. Thank you.

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