The above chart shows a snap shot of the US Dollar sliding lower and lower on a daily basis, the next stop is at the ‘72′ level from where its rallied the last time it traded so low.

This is a key support level that needs to hold if the dollar is to retain any credibility. If that fails then the dollar could go into free fall sending gold prices dramatically higher. As we have said before the action in the gold sector is all about the dollar, but only for now. So keep an eye on it as golds inverse relationship with the dollar remains intact and will continue to rise as this correlation remains in place.

Our necks are on the block as we are sticking to our prediction that gold prices will be trading around the $1250/oz mark by New Years Eve, so its either bubbly or table wine in a brown bag to be consumed in the car park behind the Chez Nous for us.

Hang on to your core position but do whatever minor surgery that you think may be required. We are entering a period of explosive moves for precious metals when gold will move $50/oz in one session and silver could well put on $2.00/oz in a similar move.

If ‘72′ fails the cat will hit the fan, you have been warned!

Have a good one.

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