Calling The Moves In The US Dollar & Precious Metals
by Mike Paulenoff
November 12, 2022 • 10:55 AM EST
On September 30, 2022, Mike Paulenoff posted the following currency and precious metals commentary to our discussion room at MPTrader:
The Dollar and the PM Miners-- I can make a compelling technical argument that this week's major downside reversal in the US Dollar Index (DXY) from a multi-decade high at 114.78 to today's low at 111.58 (see my attached Daily Chart) exhibits bearish form, which informs me that DXY could be in the initial grasp of a significant topping process that will press the Greenback lower for weeks if not months to come.
With the foregoing Dollar Index analysis in mind, I can make an even more compelling, more confident argument that GDX (Gold Miners ETF) ENDED the entire April-September downleg from 52.20 to this past Monday's (9/26) low at 28.62. If the Dollar is entering either a period of stagnation or correction, it will cease to exert heretofore intense headwinds on the precious metals complex, and instead-- especially if the Dollar weakens-- could actually provide tailwinds for a period of appreciation for the metals in particular, and the commodity complex in general.
My attached Daily Chart of GDX shows this week's upside reversal action from a 2-1/2 year unconfirmed new low at 21.52 to today's high at 24.55 that is bumping up against its nearest term Aug-Sep resistance line, which if hurdled and sustained, will trigger upside projections to 25.50/70 next. To really gain upside traction, however, GDX needs to take out and hold above 27.60 for a run at its 200 DMA, now at 30.95.
Fast-forward to Friday's (Nov 11) close, we find DXY down a whopping 7.5% from its end-September high and GDX up 17% from Mike's initial chart post to our members -- and up 32% overall. The Dollar has developed a head of steam on the downside, and the Gold Miners ETF (GDX) is in the grasp of the most powerful advance in nearly a year.
How much further does this inverse Dollar-GDX move have left? How long might it last? Join Mike Paulenof and MPTrader members this week for their ongoing technical and fundamental discussions and analysis of GDX, and DXY, as well as many other opportunistic setups in ETFs, individual stocks, macro indices, commodities, and Bitcoin.
Decades of experience matter! Mike Paulenoff started his career in 1980 as a precious and industrial metals commodity analyst for Smith Barney in NYC. He was thrust right into the fire of climbing commodity prices amid runaway inflation until Fed Chairman Paul Volcker suffocated rising price psychology with his draconian interest rate hikes that sent the US economy into the most serious recession since the Great Depression. Some of this sounds VERY familiar, no?
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