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The above chart looks at the U.S. Dollar/Gold ratio over the past 25-years. From 2001 to 2011, the ratio headed sharply lower, reflecting that the US$ was much weaker than Gold for almost a decade. Starting in 2011, the ratio has turned up, reflecting that the US$ has been stronger than Gold. In the lower right corner of the chart above, the ratio is making an attempt to break below 3-year rising channel support.
Below looks at the same US$/Gold ratio and we applied the 50 & 200 Day moving averages to the chart.
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The 50-day moving average is now crossing below the 200-day moving average, often called the “Death Cross.” At the same time the ratio is attempting to break below 3-year rising support at (1) above.
This is the first time in years that a “Death Cross” and a break of rising support, is taking place at the same time. The day before the highest weekly close in history, the Power of the Pattern suggested that metals could be a place to avoid for years to come.
The combo of a breakdown in the ratio and the death cross, would suggest that a multi-year trend could be changing at this time.
