One Last Decline, Then the Rebound in Gold

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...Since the dollar index is so inversely correlated with gold right now, we can't really expect gold to turn around and head back up until the dollar index tops out...but the dollar rally is running out of time and energy...

...Gold has been going sideways right near the recent lows, which is a generally bearish way for a market to consolidate after a strong move down. Plus there have been so many opportunities to break out over $815 - $820, and it's just not happening, which suggests that gold needs to go down further before the right sentiment mix is created for a strong rebound rally.

There are also a few other things that are not helping gold right now, as silver is looking very weak and the dollar index is looking very strong.

In the latest Fractal Silver Report, I discussed how silver looks ready for the next "free-fall" decline down to the final lows for this big corrective pattern.

Now on Tuesday it looks like silver is caving in -- as usual, ahead of gold -- so this is a big clue that the next hard down leg for precious metals is gearing up.

This next decline in silver should set up a monumental trade to the upside, as no matter what happens with silver down the road, the next immediate move should be a bounce up to the last major breakdown at $16.50. So silver is likely to move up over $5 on the rebound rally, which should be one of the most profitable trades of the year.

This is the "spring-loading" effect that I discussed in my last article, which is a very powerful -- and more importantly, predictable -- force in a highly speculative and volatile market like silver...

Since the dollar index is so inversely correlated with gold right now, we can't really expect gold to turn around and head back up until the dollar index tops out...but the dollar rally is running out of time and energy...

A correction in the dollar should send gold and silver soaring back up, but first we are likely to see one last major decline...

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