While everyone has been glued to the TV this week watching the election play out and people trading the markets have been happy with the rally and gold bugs have been winning big again, I want to point out to you what is probably the most important chart of the week.
It’s the US dollar index, because it is falling and poised to make a new 52-week low. Take a look at Invesco DB US Dollar Index Bullish Fund (NYSEARCA: UUP), which tracks it.
The US dollar index actually had its biggest monthly drop in decades in July. That led to an extreme oversold condition. In a bull market that leads to a big rally, but in currencies in bear markets you instead just get a drifting action that leads to a new bear leg down.
That’s what is getting ready to start and is why we are seeing money pour into gold, silver, and mining stocks this week, because when the dollar goes down they all tend to go up.
Multiple major currencies around the world are breaking out against the US Dollar now.
This is what is behind yesterday’s second and final buy signal in the mining stocks I talked about this morning.
For my overall thoughts on what a Joe Biden win means for gold and the markets check out the Youtue video I did a few days ago. You can find it here.
-Mike
