Gold, Silver, & 40-Year Cycle of Currency War: Dollar’s Farewell Tour
07-29-23 Outlook 2023/24: The Dollar’s Farewell Tour – “2022/23 ushered in a new 40-Year Cycle of Currency War… and a likely multi-year peak in the US Dollar Index. One of the interesting aspects of that is when one removes the smoke and mirrors of comparing one fiat (paper; debt-based) currency against another… and assesses the Dollar’s value based on more historically-sound comparisons.
The primary ‘yardstick’, with which to gain a better measurement of the Dollar’s value, is the value of Gold. If one just uses the Dollar/Gold value to compare, it is easy to see the Dollar peaked in late-2015.
When compared to or valued in Gold, the US Dollar began a decline in late-2015/early-2016 – exactly 40 years from when the leading financial & economic nations issued their divorce degree from Gold in Jan 1976… the Jamaica Accord.
That occurred on the 30th year of the IMF – reinforcing the significance of late-2015/early-2016, a 70-Year Cycle (of Kings and Governments) from late-Dec 1945. Cycles were indicating these institutions had run their course and were soon to be overtaken by a new wave of global monetary alignments.
BRIC I
As this was occurring, multiple replacements were waiting in the wings – slowly developing as future alternatives, or antagonists, to US Dollar global hegemony. Most of them include China & Russia as founding or primary partners.
In April 2016, the Shanghai Gold Exchange launched a yuan-based gold futures and fixing, diving into the deep end with the big boys, so to speak. Before & after that time, China and many of its partners have taken repeated steps to lessen the role and influence of the US Dollar in global trade.
At the same time (2016), the BRICS New Development Bank – based in Shanghai – was entering into force, issuing its first bond, and signing its first loan agreement. It has been one ‘week of time’ (7-year period) since the events of 2016 and a new phase of this seismic shift is taking hold.
Critical mass has not yet been reached, but its just a matter of time.
BRIC II
That was also the time when a fledgling digital currency named Bitcoin began to make a name for itself. It had seen an initial surge in 2013, but 2016/ 2017 is when Bitcoin surged from ~350 to almost 20,000 – a 50+ multiplier of value (a percentage move yet to be matched… or even approached).
While the US Dollar was focused on the competition coming from Gold, another combatant stealthily entered the ring and began to double-team the attack on the Dollar. The battles rage on.
BRIC III
As these attacks were occurring, the Dollar was simultaneously beginning to lose the support of its biggest backing – oil. In order to understand that significance, one needs to go back to 1973 – 1976 – the period leading into the US Dollar’s final divorce from Gold…
After the Middle East had wielded the ‘oil weapon’ for the first time – surrounding the Yom Kippur War of Oct 1973 – the US realized how easily its economy could be brought to its knees. So, a deal was made with Saudi Arabia and key members of OPEC.
One part of that deal involved Saudi Arabia funneling large amounts of their ‘petrodollars’ into US Treasuries – thereby supporting the US Dollar and the debt that backed it (following the Nixon Gold Shock of 1971).
Additional deals followed that involved those petrodollars paying for US aid and weapons/defense.
In more recent decades, many oil exporters invest in not only treasuries but also stocks, via sovereign wealth funds… reinforcing the ‘Energy’Equity Connection’ that has often been discussed in these publications. In the midst of that, however, many of those exporters rant against Dollar-backed oil.
BRIC IV
In precise fulfillment of the 80-Year Cycle of War, Russia invaded Ukraine in early-2022 and set in motion a series of events that is still unfolding. One of those primary events is the seismic shift in oil sales and exports, the ramifications of which have only begun to play out. China & India are key examples.
With little warning, much of Europe suddenly rejected one of its largest oil & gas suppliers – initially aiding the US energy industry. At the same time, countries like India, China & Russia began to bond more closely – with cheap oil being an initial benefit to India and China.
However, it is not just oil that these countries have been scooping up…
BRIC V
In 2022, Central Banks bought a massive amount of gold, almost double the totals of the next highest years (2013 & 2018). Since 2010, the largest gold purchasers have been Russia, China, India & Turkey… with Russia being on a massive buying spree since 2014 when Western sanctions – over Russia’s annexing of Crimea – were enacted. At the same time, European nations have been sellers.
Coincidence or Coordination?
With all these similarities, or common interests, you would think that China, Russia, India, et al would bond together and join forces. Oh, wait, they have!
One of the growing influences in anti-Dollar politics has been the BRICS nations – Brazil, Russia, India, China & South Africa. Their influence, and that of parallel organizations like the Shanghai Cooperation Organization, is slowly but steadily uniting a large chunk of the world’s population in an adversarial or competitive role against the West.
When the winds of change increase their intensity, will the House of Paper (fiat); the House of Oil, or the House of BRICS (gold bricks?) be left standing?
August Omens
To reiterate from last month, late-July/early-Aug ‘23 ushers in a period that has ties to multiple geopolitical attacks, revolts & other upheaval events.
While this does not mean every, or even many, years are expected to repeat the same pattern, it does identify a time of the year to watch when related multi-year and multi-decade cycles are already converging and raising awareness.
While early-Aug ‘23 is the anniversary of some of these attacks & invasions, the latter part of August ‘23 is the anniversary of multiple Russia-related revolts, coups, attacks AND Ukraine Independence… particularly Aug 22 – 24. Here is a small sampling:
- Aug 23 – 30, 1914 – Battle of Tannenberg between Germany & Russia (first month of WWI) – decimating Russia’s First & Second Army (triggered on Aug 17 – 22, 1914).
- Aug 30, 1918 – Assassination attempt on Lenin leaves him seriously wounded; triggers Red Terror (mass arrests and executions).
- Aug 23, 1939 – USSR/Nazi Germany non-aggression pact signed. In the ~month that follows, Nazi Germany and then the USSR invade Poland.
- Aug 24, 1991 – Ukraine Independence.
- Aug 24, 2023 – 18-month anniversary of Russia invasion of Ukraine & 12-month/6-month anniversaries of major US aid announcements.
- Aug 22 – 24, ’23 – BRICS Summit in South Africa – Arrest warrant for Putin; BRICS-based currency & expansion on agenda. Seems like a prime time for Mr. Putin to make a statement…
Gold & Silver remain in a trading range after peaking in perfect sync with cycle highs on May 3 – 5. Those highs fulfilled ~3-month low-high-(high) and ~4-month low-high-(high) Cycle Progressions in Gold & Silver and reinforced the focus on late-Oct/early-Nov ’23 for a more significant peak.
A peak in late-Oct/early-Nov ‘23 would perpetuate a consistent ~9.5-month cycle that timed the March ‘22 peak and then the early-Jan ‘23 peak. It would also fulfill an over-arching ~19-month high-high-high-(high) Cycle Progression in Silver & complete a ~1-year/~360-degree advance in Gold.
The early-May ‘23 peak created a corroborating ~6-month/~180-degree low (early-Nov ‘22) – high (early-May ‘23) – high (early-Nov ‘23) Cycle Progression. As is often the case, a large part of the next advance could occur toward the end of that cycle. Weekly cycles and indicators are reinforcing that and beginning to hone when an accelerated rally is more likely.
In the interim, a multi-month low is likely in the middle half of Aug ’23 (Aug 14 – 25, ‘23) – the convergence of multiple cycles and timing indicators in Gold – including a ~3-month/ ~90-degree low (Nov 23) – low (Feb 27) – low (May 25/26) – (low; Aug 23 – 28) Cycle Progression. The action of Aug 1 – 4 needs to corroborate this.
If the late-Aug ’23 low is a higher low in Gold, it would set the stage for [reserved for subscribers]…
Silver peaked in mid-July, perpetuating a ~3-month/~90-degree cycle from its mid-April & mid-Jan ’23 highs. Those highs were preceded by lows in mid-Oct & mid-July 14, ’22… and a high in mid-April ’22… a consistent string of ~3-month turning points.
The mid-July ’23 high fulfilled a ~3-month/~90-degree low-low-high-high-(high) Cycle Progression and projects another high in mid-Oct ’23 (possibly diverging & preceding early-Nov highs in Gold) Other highs could be seen in the interim. As for price…
On the monthly chart, Gold’s June & July ’23 lows were set right at its rising monthly 21 High MAC (AND 40 High MAC) – after pulling back to that ascending support – reinforcing the likelihood for a strong rally in the 3 – 6 month period to follow.
The stage is slowly being set for a future rise… but the curtain has not yet been raised.
Gold & Silver are adhering to the outlook for a multi-month period of consolidation before the next advance. Weekly, and ultimately daily, indicators and cycles should help hone the timing for that expected rally and could help pinpoint when an accelerated breakout is likely.
The XAU & HUI are similar to Silver – having neutralized their weekly downtrends multiple times but not yet being able to turn them up. It would take weekly closes above 130.77/XAU & 253.71/HUI to do so… and to confirm a multi-month low is forming.
On a weekly trend & intra-year trend basis, they entered neutral territory on July 28 while fulfilling intra-month analysis for rallies to ~130 – 133/XAU & 254 – 257/HUI. That came on the heels of weekly cycles projecting intermediate lows in late-June/early-July.
Both indexes began July by spiking slightly below their June lows while retesting their flattening monthly 21 Low MACs – pivotal levels of multi-month support – and quickly reversing higher… Based on their weekly trend pattern, they could see a 1 – 3 week sell-off into late-Aug ’23 – in sync with a ~23-week high-high-high-low-low-(low) Cycle Progression and an overlapping 45 – 51 week low-low-low-(low) Cycle Progression.
Looking out a little farther, the XAU & HUI are expected to set their next major peak in Oct/Nov ’23 – the next phase of the 9 – 10 month/41 – 45 week high-high-high-(high) Cycle Progression that timed the initial Jan ‘23 highs. In the case of metals and other markets, the correlation between intermediate cycles (surrounding the week of Aug 21 – 25, ‘23) and Russia/Ukraine-related cycles is worth monitoring.”
Gold & Silver remain below their May 3 – 5, ’23 cycle highs (likely 3 – 6 month peaks) and on track for an overall decline into the next multi-month low – projected to take hold in the second half of Aug ’23 (watch August 17 – 24), when a myriad of weekly & monthly cycle lows converge and usher in a unique period of time – in the markets and geopolitically.
Geopolitical cycles argue for a related trigger event on ~Aug 22 – 24, ’23 (when Vladimir Putin is projected to ‘make a statement’ with some sort of action that alters the landscape moving forward and starts the clock ticking on a more significant event leading into future cycle highs).
All of this action, since late-2022, is powerfully validating the onset of a new 40-Year Cycle of Currency War in which Gold & Silver possess unique potential for the coming months and years! The XAU & HUI are similar and projected to set decisive lows surrounding mid-Aug ’23, ideally on Aug 17 – 21, ’23 – the recurrence of an uncanny 23-week high-high-high-low-low (Mar 6 – 10, ’23) – (low; Aug 14 – 21, ’23) Cycle Progression that portends a multi-month bottom on Aug 14 – 21, ’23 (greatest synergy of cycles on Aug 17/18, ’23).
Where are Metals Likely to Bottom on August 17 – 24, ’23?
Will Geopolitical ‘Statement’’ (Aug 22 – 24, ’23) Set Stage for Next Rally!
How Could Impending Gold/Silver Low (Aug 14 – 25, ‘23) Corroborate 2024/25 Outlook?
Refer to the April 11, 2023 special issue of The Bridge – Gold, Silver and Elliott Wave Structure – and subsequent reports – for expanded analysis and charts.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.