EDITOR NOTE: The challenge with technical analysis articles is that they often assume you understand the “technical” reason for pullbacks and bounces. Chart-savvy investors may understand this, but for those who don’t, technical explanations are often not meaningful, let alone convincing. That’s why it’s important to understand basic concepts of support and resistance--both indicate historical areas where buyers jumped in (support) and holders or short sellers unloaded positions (resistance). Right now, critical support for the dollar stands at 88.00--plenty of historical buying at that level. Expect a bounce. But if it retests that level and falls below it, we’re looking at 80.00. These are significant declines, and the reason why we follow them is because inversely, gold and silver rise every time the dollar falls. If you’re looking to add more to your non-CUSIP silver and gold positions, some analysts are targeting $2,300 by May of 2021. Numismatic coins may go even higher. Fundamentally, there’s every reason to believe the metals will rise far above this target, After all, the Fed is looking to overshoot their inflationary target, and their timeframe will encompass the next few years. Investors will be seeking a hedge the higher inflation rises, and non-CUSIP gold and silver are the two best ways for you to protect your wealth and purchasing power.
The dollar is in the middle of a significant devaluation. The current breakdown could extend into Q2 2021 before the next rebound. We expect sharply higher precious metals prices as a result, with silver and platinum taking the lead.
I think the dollar is experiencing a meaningful devaluation. Prices are extremely overdue for a bounce, but the trend pushes persistently lower. The final area of support arrives at the 2018 low of 88.15. If that level fails, I believe the USD could collapse to 80 by April/May 2021.
We are in a similar setup to the post-trendline breakdown of gold in 2002/2003. Consequently, I believe the dollar is on the verge of an accelerated decline towards 80. The weakening dollar should push gold higher into April/May 2021 before the next 6-month cycle correction.
In 2002/2003, the US was coming out of recession, just like now. The recent $900-billion relief package will not be the last. I expect one or two more programs next year – this should continue to deflate the dollar and push hard assets higher.
MEDIUM-TERM GOLD FORECAST
The 6-month cycle in gold likely bottomed at $1767.20 in November. Prices are climbing the “wall of worry,” and I expect a breakout above the intermediate trendline within the next 1 to 3-weeks. The trigger event to push gold through the trendline could arrive any day, but the time surrounding the January 5th run-off election in Georgia is of particular interest. The minimum target on a breakout is $2300 for this leg higher.
Note- Silver and Platinum are leading gold and should outperform gold in 2021. Our educational metals portfolio is long GDXJ, SILJ, GDX.
Originally posted on FX Empire