Mining for Money: You Can Gain from Gold’s Seesaw of Pain

Our lesson today is the Seesaw of Pain. And how you can profit from it.

Reuters reported this morning:

The dollar edged up against the yen on Friday, recovering from its worst run of daily losses vs. the safe-haven currency since 2010, but gains were capped by worries that U.S. President Donald Trump was on course for defeat on a new healthcare bill.

By the afternoon, the greenback started sliding again. That said, a bounce over the next few days wouldn’t surprise me. And that opens the door to an opportunity.

Let me lay it out for you.

Here’s a chart of the Dollar-Yen. I’ve added gold, as well as a trend indicator on the bottom.

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As you can see, the trend in the dollar-yen is bad. And it is the opposite of what is going on in gold. In other words, the dollar’s decline is boosting gold.

Often — but not always — gold moves opposite the U.S. dollar. One going up hurts the other. I call this "The Seesaw of Pain."

After such a sell-off, the dollar is going to try and bounce. It could for a few days. This could push gold lower. And that lines up with gold banging its head on a big downtrend. I talked about that in yesterday’s Uncommon Wisdom Daily afternoon edition.

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Mind you, there’s nothing that says gold must pull back here. The odds favor it, sure. But the market loves to make fools of us all. And gold has been showing incredible tenacity this month. Gold might throw back its head, laugh and sprint higher … leaving us all in the dust.

But IF the dollar bounces as it should, that will be an opportunity to get long gold.

You can read the rest of my Thursday analysis on gold by pointing your browser HERE. Read Brad’s fine column on healthcare, then scroll down to see my "Mining for Metals" column.

Now, let’s get back to the first chart, the chart of the U.S. Dollar-Yen. Look at the ADX indicator, which measures trend strength. It has turned bearish for the dollar-yen.

It’s true this is a rearview mirror. But the bearish trend really started on the 15th.

And it has plenty of room to get more bearish. There is no guarantee that will happen. But more investor disappointment in Washington could certainly deepen that trend.

Bottom line: A short-term bounce in the dollar might be a short-term buying opportunity in gold and miners. Make the Seesaw of Pain work for you.

P.S. I’m putting the finishing touch on a virtual goldmine of my favorite microcap stocks in the metals and mining space. And I’m planning to unveil these to our very best subscribers in the coming weeks. If you’d like me to notify you about not only what to buy … but also precisely when … just let me know by clicking this link here.

Sean travels far and wide to seek out small-cap values in the natural resource sector. His journey started in New England. As a youth he worked on Mt. Washington, on the cog railroad that runs to the summit.