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Precious Metals Benefit From a Shift in Currencies

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No market can move straight up even if fundamentals are positive as is the case with gold and silver.

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All in all, it seems that both the US and EU are going to debase their currencies, each in hope of gaining a competitive advantage in exports and devaluing its own debt. Who will win this race? Whether it will be the US or EU that will manage to "solve" more problems by printing money, we know that clear winners in the long run will be gold and silver investors and charts appear to confirm that (charts courtesy of http://stockcharts.com.)



Let's take a look at the long-term USD Index chart. We focus on this chart to analyze the USD Index because last week's moves have long term and medium term significance.

The major breakout was invalidated last week and the move below the key resistance level is being verified right now. Breakout's invalidation was truly a very unlikely development. Just by the term itself, breakouts normally hold and are generally not invalidated. The previously broken resistance line normally becomes a support line. With the breakout being invalidated last and this week, a true sign of weakness in the USD Index is clearly seen and points to a bearish outlook for the months ahead.
No positions in stocks mentioned.
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