The Coming Dollar Highs
QUESTION: Your reference (not for the first time) to new USD highs may be the most striking — and consequential – of all the insightful and startlingly original remarks you have made in recent years.At the very least it must rank high and cause not a few of us to stroke our chins and ponder.
It seems churlish even to ask,for the consequences are already implicit,but ask I shall. Are you referring to the well-known USDX index with extant highs in Feb 1985 at 164.72 as the high to overcome?
Perhaps you refer to proprietary indices in which case I withdraw my inquiry.
Much thanks for your incomparable commentaries.
Best wishes
B
ANSWER: This forecast is based upon our proprietary index 1900=Par. The reason is simple. In 1985 the Euro did not exist. Therefore, how they patched that index we have not looked at carefully. It may exceed the 1985 high depending on its mix. In our index, it extends back much further and is far more comprehensive. You can see that the 1985 high is no longer a spike isolated high. We are flattening out the pattern and this warns of a rally. We are just the prettiest of the three ugly sisters – Japan – Europe – USA. The 1995 low was a retest of the highs of the Great Depression. This is the same general testing pattern we should see in gold – the retest of the 1980 high of $875.
Gold – The Pop
We closed above the 1217 level suggesting we will press a bit higher. We now need a closing above 1220 to signal a rally is possible up to the 1255 to 1275 area. We need a year-end closing above 1310 to shift gold into a neutral position.
A number of emails have poured in asking how could we possibly see a crash and a pop swing coming. This is simply pattern recognition models that are very sophisticated and are part of the AI system. Keep in mind this is not personal opinion. The ONLY way to do this is to monitor the entire global economy simultaneously.
A key number for the 2014 close will be 1228 at the minimum. A failure to close at least above this level at year-end will be very bearish for next year. This area will now also become resistance for now.