Weaponizing the Dollar; Gold Mining Stocks Chart Path to Breakout / Commodities / Gold & Silver 2019

Federal Reserve ChairmanJerome Powell’s comments on inflation last Wednesday added fuel to the contra-dollartrade.

During a press conferencefollowing the Fed’s decision to leave interest rates unchanged, Powell said,“In order to move rates up, I would want to see inflation that's persistent andthat's significant. A significant move up in inflation that's alsopersistent...

"To move inflationexpectations up from where they are, which appears to be a bit below 2%, willnot happen overnight."

In other words, the Fedwon’t be satisfied until consumer prices rise much higher over time.

This “weak dollar” policymay come back to bite, though, as the Federal Reserve Note steadily losescredibility as world reserve currency.

Over the weekend,Treasury Secretary admitted as much.

“People don’t have to usethe dollar, we have the right to put restrictions on people using the dollar.And over a long period of time, if we’re not careful, people will look at usingother currencies,” Mnuchin said Saturday in a CNBC interview.

Despite insisting that“we are not weaponizing the U.S. dollar," Mnuchin’s Treasury Department isleveraging the dollar’s privileged status in international trade to impose andenforce economic sanctions against U.S. adversaries. They include North Korea,Venezuela, Iran, and Russia.

But as CNBC noted,“Officials in China and Europe have been actively promoting their currencies assubstitutes for the dollar when it comes to both reserves and transactions,particularly in the face of expanding U.S. sanctions and protectionist tradepolicies like tariffs.”

The central banks ofChina and Russia are also steadily replacing their sizable Federal Reserve Notereserves with gold.

GoldMining Stocks Chart Pathway for Gold Breakout

Gold and silver prices remain miredin weeks-long trading ranges. They are essentially moving sideways – for now.
Preciousmetals mining stocks, however, are moving up. The chart of the HUI gold minersindex shows an uptrend in place since mid-October.

The HUI hastraded above its 50-day moving average for several days in a row. The 50-dayline itself is now also curling up, confirming underlying technical strength.
If the HUI isa leading indicator for spot gold (and it often is), then gold prices may be onthe verge of also breaking out. Gold closed last Friday right at 50-day movingaverage resistance.

A couplestrong closes above the 50-day line should put gold on a pathway to an extendedrally.

Silver,meanwhile, has been trading around the $17.00/oz level for the past five weeksand needs to break above $17.30, then $17.50, to get something going on theupside.

Bulls can takeencouragement in the impressive outperformance of the Silver Miners ETF(NYSE:SIL). It gained 4.5% last week to reach a three-month high. Another moveof that magnitude this week would put SIL at a new high for the year – and givesilver itself some catching up to do!

Stefan Gleason isPresident of Money Metals Exchange, the national precious metals company named 2015"Dealer of the Year" in the United States by an independent globalratings group. A graduate of the University of Florida, Gleason is a seasonedbusiness leader, investor, political strategist, and grassroots activist.Gleason has frequently appeared on national television networks such as CNN, FoxNews,and CNBC, and his writings have appeared in hundreds of publications such asthe Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2019 Stefan Gleason - All Rights Reserved

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