The Precious Metals sector has broken strongly higher in recent days, with silver breaking out of its downtrend just yesterday, when the fundamental reason for this move emerged – the Fed has let it be known, via the St Louis Fed governor, that they are going to drop rates soon. This is clearly a panic move triggered by the stockmarket breaking down below key support – the intention is to head off a stockmarket crash, but it looks unlikely to succeed because they have much less room to drop rates than they had back in 2008, however, what they are likely to succeed in doing is breaking the dollar down into a severe bearmarket, and a storm is already bearing down on the dollar due to the accelerating global trend to dedollarize which has been given added urgency by the US administration’s overt bullying of enemies and allies alike by means of sanctions, tariffs and in some cases the threat of military action. This is why gold has been rallying, and this time it does not look like it will be a false dawn – instead it appears to be the start of a major breakout drive that will see gold launch out of its gigantic 7-year long base pattern by breaking out above key resistance at the $1400 level, a development that we have been anticipating all this year.

We’ll start by looking at the latest action in the dollar index. On its 6-month chart we can see that it has started to drop away hard after making new highs as recently as a week to 10 days ago. This sharp drop looks like it may be the start of something more serious, and we know why having looked at its 2-year chart some days back.

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