Positioning Ahead of Additional Dollar Weakness – Craig Hemke (24/01/2018)

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by Craig Hemke, Sprott Money:

Through the first three weeks of 2018, one of the key stories has been the falling US dollar. Expect this trend to continue and even accelerate as we go through the year.

After peaking with a false breakout near 104 in early 2017, the US dollar (as measured by the Dollar Index) has continued to plummet in 2018. As I type, the index is near 90 and already down over 2% year-to-date. Dollar weakness has traditionally been positive for commodity prices, and the evidence of this can be seen below.

First, check the clear and obvious top in the Dollar Index. Note the breakdown through 92, and the most recent drop through the 2017 lows near 91.

In a reaction to this, note the clear bottoms and breakouts in the two most important global commodities, copper and crude oil:

You can also see this early-stage commodity rally in the broad-based CRB Index. Note the recent threat to move above the 200 level for the first time since mid-2015:

So far, nearly the only “commodity” unaffected by the falling dollar is silver. This is no surprise, as the silver “market” is easily the most manipulated in the world. As you can see below, in this chart from Nick Laird at GoldChartsRUs, the monopolistic concentration of positions held by a small handful of Bullion Banks stands in stark contrast to other markets such as crude and copper:

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