I know I may sound like a broken record sometimes, but the dollar late yesterday moved back over 94 on the index and continued higher today continuing a pullback in gold.
For short term thinking a fall below 94 I would be long gold and above 95 not want to be long gold or silver at this point. No, the dollar and gold don’t trade perfectly inverse from each other every single day but for the most part you can use the dollar as your “key” for what told will do, the opposite direction.
I want to point out something to you I haven’t touched on in awhile and that is the 10 year treasury. It is still under 2% and there is no indication higher rates are on their way. Some say gold is up because of negative rates but we don’t have negative rates here in the U.S. Since February, rates did move to 2% but now sit at 1.85% and I believe as the dollar moves higher will continue lower, more than likely below 1%. This is good for your bond portfolio.
Is the market overall getting frothy with the S&P 500 over 2100 again? The answer is yes. We could soon be seeing a top and I think the significance could be money first flows to treasuries but some may still slide over to gold pushing it higher and you can’t ignore the strength in silver either. Even so, watch that dollar for real clues of what’s to come from a micro perspective. As the dollar moves up, gold and silver both will begin to fall.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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