Technical Expert Eyes Gold, Silver and Currencies

Speculation of a strong economic recovery coupled with ongoing monetary and fiscal stimulus worldwide is fueling inflation expectations higher, asserts Omar Ayales, editor of Gold Charts R Us — and a participant in The Interactive MoneyShow Virtual Expo on February 16-18. Register for free here.

It is providing support for resources while precious metals are forming a base above key levels and equities are extending their upside.

Not surprisingly, inflationary expectations are putting downside pressure on the U.S. dollar index. This past week, the dollar extended its one month rebound rise, regaining the 91 handle. But resistance below the September downtrend near 93 is very strong it’s showing downside pressure remains.

The dollar is now falling back, re-testing short term support at 90.50. A clear break below this level signals continued weakness. U.S. dollar weakness is giving global currencies an upward boost.

Invesco CurrencyShares British Pound Sterling ETF (FXB) has been among the strongest, holding near the recent highs despite U.S. dollar strength.

It has just broke to a new high for the move, showing strength with more upside potential. Its leading indicator is breaking out and suggesting momentum is shifting in favor of FXB.

Meanwhile, my largest exposure is in precious metals, specifically gold, silver and the miners representing 48% of my total portfolio.

Gold is showing support above the November lows, forming a new uptrend since April-June at the $1800 level. If gold now holds above $1800 and rises above the August downtrend near $1930, a rise to the August highs initially, would be likely.

Novagold (NG) is bouncing up from recent lows. It's testing the September downtrend near $10, just as our technical indicators show that the stock's momentum is picking up steam.

If NG breaks above $10, a rise to its double top resistance near $12 would be likely. Keep your positions. If not in, buy some at market.

Silver is looking stronger; it is forming a bullish ascending triangle. A bullish continuation pattern with breakout resistance at the August highs near $30. If silver breaks above $30 on a 2-day close, it's off to the races!

Silvercorp Metals (SVM) is holding above the Nov lows near $5.50. It recently pulled back after breaking above the August downtrend. If SVM now stays above $5.50, it could then rise to the August highs near $9. Keep your positions. If not in, buy some at market.

Hecla Mining (HL) is also jumping up from support at the October lows near $4.50. It’s holding above the March uptrend.

If HL holds above this uptrend, it could rise to the top side of the March upchannel near $9. Keep your positions. If not yet in, buy some at market.

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