Elsewhere, Friday’s dip in the Gold market is being blamed on one trade. All I can tell you is the precious metals have once again reached the point where they are at aggressive support levels based on wave relationships. But so is the US Dollar. Precious metals have reached the point where they are almost the red headed stepchild. Almost nobody believes in their ability to rally anymore. That’s what makes them interesting. The longer term Dollar likely has another leg down in its long bear market. When that happens is hard to say but in the event of a default, now would be a good time for the technical situation to line up with psychology because if the Dollar does fall, the technical situation supports it so we won’t be able to say a drop because of default was the news event leading the technicals. The technicals are ripe and a sell off in case of default would end up being a case of people looking for an excuse to finally dump Greenbacks. As I write this various banks are cutting their Dollar forecasts so you can also see bearishness building and all it would take is an event like this to finally finish off the very long bear market. The problem is that a default could be catastrophic. If the Greenback were to break down from the bottom of its long term range it might not stop until it gets to the universal support area near 61.
I’ve told you in this space for the last four years that as long as the Greenback maintains the stability of its trading range the economy would continue to recover even if it did so at a glacier’s pace. We’ve seen that materialize. But it isn’t staying in a trading range forever. I think it eventually breaks down whether now or in the next two years.