I always warn about trying to too closely correlate dollar and gold movement. You
know a lot of traders still think there's a one hundred and eighty degree in
verse correlation that needs to just move in tandem or inverse tandem. You're listening
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Carrie Lutts. Well, markets have definitely been volatile lately, but they've been
heading higher, especially the stock market. It's the dollar, etc. Where
are they heading? Where is gold going? Our good friend Eric Haddock is
with us now, and Eric, it's great to have you back on.
You find Eric at inside i nsidetrack dot com. And if you got a
question for Eric, shoot me an email k l at kerrylets dot com.
So, when last we spoke, Eric, you were talking about an intermediate
high for gold and a lot has passed since then. First, let's start
out talking about the dollar. Well, the dollar, I think has been
in a broad congestion range down near its lows, and I'm talking on a
three to six month basis. We saw the dollar reach some major upside price
targets last year. In fact, broadening out that perspective or that outlook for
a minute, the dollar since two thousand and eight has been in a slow,
steady up trend. It's that it's lowest low basis. The Dollar Index
in two thousand and eight saw two waves up during that time, and then
as we came into twenty eighteen twenty nineteen, it was ready for a final
fifth wave rally, which took hold. And the upside price targets that I
had published were right around one ten to one thirteen on the Dollar Index.
We hit that last year. So from a price perspective, we are probably
in the process of setting a major top in the Dollar index after a fourteen
year up trend. I think that that's going to have ramifications on a lot
of other markets down the road a little bit. But right now, dollar
came into this year, set an initial bottom and has been trying to rebound
from that. But one of the things I've kept telling my readers is that
in order to confirm anything more than just a couple month bottom, the dollar
needs to give a weekly close above its early January peak. That has implications
on an intra year trend indicator that I use, and really it should close
above its early March peak as well, which was set near the same level,
so right around one oh five. Until then, it is still languishing.
It still has the threat of heading back towards its lows on a short
term basis. A week and a half ago, I explained why a lot
of indicators were starting to group around one oh one fifty one O one sixty
in the September Dollar index futures. That's where I'm looking for it to drop
to in the short term, and following that that that's going to really have
a decisive impact on what the dollar does for the next three to six months.
All right, So could be so you think that's an intermediate low or
is that a whole shift in the trend. I think that the dollar has
has set a three to six month bottom, that that low could even hold
longer than that, and that we're in a treeting range it's probably going to
stretch out for some time. Again, having fulfilled five to ten year upside
price targets, there's a very good chance that a major peak is intact in
the dollar index. That doesn't remove or preclude a retest of those highs.
There's other indicators that I use to signal whether or not that's that's a possibility,
but any additional upside potential appears very limited based on those price objectives.
And from a timing perspective, I've been talking about twenty twenty three as being
a major turning point for the dollar, so I think we're in the very
early stages of that transition, and in a lot of trend reversals, you'll
see what we have seen in the dollar the last year, and that as
you get an initial somewhat sharp sell off, and a lot of that is
a reaction to the to the blowoff rally that was seen leading into a top.
But then a market will trace out a very lengthy, volatile trading range
kind of a bee wave or a week two after the initial sell off.
That often consumes more time than even most expect because it's going through this battle
between the bulls and the bears. And I think that's where we're at.
So I think it's going to be a trading range for some time, perhaps
throughout the remainder of twenty twenty three. But as that's happening, you get
some of your broader indicators that are more lagging indicators. They're ruling over and
starting to head down, and it's that sequence that really sets a market up
for a bigger decline, which is what I'd look for Alden's next year.
That a couple of months ago in my monthly newsletter Inside Track, I was
even discussing when I expect multi year cycle lows in the dollar looking forward,
But in between now and then, I think you're going to see training range,
have those indicators slowly roll over, and then the dollar will be ready
for a more significant sell off out in twenty twenty four or twenty twenty five.
All right, So then if we're talking about the dollar, obviously that's
intimately tied in with interest rates, right glad of that's gonna dictate where the
dollar goes. What are you seeing there? I still am very impressed by
the consistency and the just the accuracy of this four year cycle that you've seen
in bonds and in interest rates. And in July twenty twenty I explained why
I thought we'd see a major multi year peak in bonds low in interest rates,
and that was four years from the July twenty sixteen peak, which was
four years from the July twenty twelve peak, and this four year cycle and
a complete cycle progression by my definition, has unfolded since the nineteen nineties.
And so after seeing that major peak in bonds in July twenty twenty, which
again is a corresponding low in interest rates, there were two things that I
looked for looking forward from that. One was the more distant vantage point or
target point, and that was for the next phase of that four year cycle
to time a subsequent lower high in bonds out around the third quarter of twenty
twenty four, so four years from that twenty twenty peak. In between those
two peaks declining peaks. Like I said, you expect normally a market to
decline for roughly two thirds of that cycle, so two thirds of a four
year cycle. And there's multiple reasons for that, but a very simple kind
of mathematical proportional reason has to do with how markets retrace, and that if
you see a decline for two thirds of a cycle. It allows enough time
for a rebound for the final third that cycle, which from a timing perspective
is a fifty percent rebound and time. So in the case of bonds,
I was looking for bonds to sell off for roughly thirty two months, which
is two thirds of a forty eight month or for year cycle, and then
rebound for about sixteen months. There's a lot of other things. That's that's
the real general broad stroke expectation. Then I look at many other timing indicators
to show where that might be off, it might be wrong, or to
validate it, reinforce it and corroborate it, and give me more cred ability
or more confidence in the credibility of that that scenario. Bonds did adhere to
that, and they had to sell off for the thirty two months. That
time frame came in at March of this year. And I think that the
March lows will continue to hold in bonds, and that the next important high,
a subsequent low and interest rates will come into play out in third quarter
of twenty twenty four. Similar to what we just talking about the dollar.
That doesn't mean that you suddenly get a big rally in bonds or a big
drop in interest rates. If anything, we should see a basing process through
most of this year and then into first quarter, second quarter of next year,
the chance for rates to drop a bit or at least the perception of
rates, because that's what really drives bonds, and see bonds rebound into that
July or all Gust twenty twenty four. Then looking out, you've got the
potential for more interrastrate hikes, but that's that's going out a year or two
even farther. Right now, I think that that bonds are an abasing period,
interest rates are peaking. You know, we're right on the threshold of
the Fed announcements. The general consensus is that they will pause rate hikes today,
but that um that they could very well make sure there's a few hawkish
comments in there after the release, letting everyone know that there still is the
chance for a future rate hike, perhaps in late July at the next meeting.
But the markets respond differently to that than just topping and bottoming in lock
step with those interest rates removes. There's a lot more going on and that
fits with this basing period. Even if there is another rate hike out in
late July. It's that's what you see during this phase of a trend.
And I think as we get later into this year, you're going to see
you're going to continue to see inflationary numbers tail off a bit. You may
see some economic numbers start to show a little bit of weakness, even things
like real estate and housing. Uh, you may start to see that start
to come down a bit, all contributing to to the FED being able to
stop the rate height cycle and start to moderate interest rates. Okay, so
down the road, is this pre elections cycling type things that this word that's
certainly all that also fits into that that and you know, if interests are
a little more favorable in second quarter, third quarter of next year, um,
that is any certainly a series or a sequence that goes along with that
four year cycle in interest rates. So that wouldn't be surprising to see that
have an influence in there either, even though we know, you know,
the fit is completely a political and you know objeck and unbiased. Yeah,
yes, so all right, so question of gold silver, we saw all
time nominal high in gold. We still haven't seen much in silver. It's
still trading more than fifty percent below its peak. What's up with that?
I always warn about trying to too closely correlate dollar and golden movement. You
know, a lot of traders still think there's a one hundred and eighty degree
inverse correlation that needs to just move in tandem or inverse tandem. But a
lot of times you will see I mean, you go back a year ago
and you see the dollar in gold moving in in sync when you've got things
like the Ukraine invasion and other geopolitical factors. With that said, I do
think that my outlook for the dollar, even the outlook for interest rates,
is consistent with my outlook for gold over the coming years and in the short
term. Coming into this year, there were a couple of key time brands
and key cycles that I was looking for in gold. One, as you
mentioned from our last conversation, was I expected an immediate peak in silver in
late January early January and golden early February. Then after they saw some some
solid selloffs into late March early April, my outlook was for excuse me,
into the late late feb early March. I think it was My outlook was
for the next intermediate peak that would probably hold for a few months to take
place. In the very early part of May, there was a lot of
intermediless cycles coming into play just in the first few days of May, and
gold and silver rallied right into that timeframe peaked in perfect lockstep with those cycles.
And while peaking though that high reinforced my outlook going out farther into this
year. And one of the important things more significant cycles I anticipate in gold
and silver is in late October early November when I think we'll see a pretty
significant peak in gold and silver, and often you get the majority of an
upmove coming in the weeks prior to that. That doesn't mean that I expect
an uptrend from right now until a early new veter. Very often the uptrend
only consumes a few weeks out of that entire time frame, And in fact,
I actually think there is some on an intermediate basis, some lower loans
to be had before gold and silver to finish their correction from the early May
peak, and there's a lot of timing indicators that are starting to hone that
outlook and pinpoint when when the next three to six months low the next best
buying opportunity in gold and silver is lining up, and that's the time when
I would expect the market to start focusing on that late twenty twenty three time
frame, in late October early November start a multi month up trend. But
as I said, a lot of times you get the biggest moves leading into
those peaks, and so I'll also be watching how al the geopolitical landscape is
shaping up in the late third quarter early fourth quarter of this year, and
a lot of other factors to corroborate that outlook. All right, so overall
we're looking higher, though I think we will definitely exceed the early May highs
by early November. To what extent that's going to be more determined by how
deep the current correction goes. I've got some expectations for that, and if
they hold full true, then then yes, I would expect higher highs.
But again that's not a that's not a straight up thing, and it could
be a drawn out sideways market with a spike high there. That's a lot
of that is a kind of a dynamic fluid situation where the action over the
next few weeks is going to help clarify or to expect over the next few
months and so forth. But that's they're the key turning point time frames that
I'm looking at, and a couple of indicators that could be clear by late
June are going to really help me home that outlook for the third and fourth
quarter of this year. Okay, now, let's switch gears. Look at
oil right now. It's trading right around seven books. It looks like it's
week could go lower. Of what are you seeing there? Well, I
think has the potential for a third quarter rally. I agree with you,
it certainly is weak right now. But the one thing I was watching was
the way in which the March and May lows were set in crude at least
gave the potential for a three to six month bottom to take hold. But
there's a weekly trend indicator that I use that has to turn up if there's
going to be any chance of that being a three to six month bottom,
and and that would at the very least, I would need to see current
get back above seventy five in the short term and get a weekly close above
that in the in the front contract month. But there's more than that that
needs to happen in order to confirm the March and May lows as a three
to six month bottom. There are some intriguing cycles coming into play out in
the third quarter late the corner that anticipate a decisive peak in crude and the
energy complex. So obviously you'd need to see a rally into that time frame
for it to be able to be a cycle peak cycle high, and that
would certainly dovetail with the recent lows holding, but it doesn't by itself.
That doesn't eliminate the possibility of additional lows before it turns back up. So
right now, it too is in a drawn out congestion phase. But I
do think that if we can see a little more constructive action over the next
couple of weeks and and crude to turn a couple of one to two weeks
two to four week indicators positive, then I would start to get a little
more confidence in those recent lows holding for some time and and the onset of
a new one to two months, two to three month rally in the energy
complex. All right, sounds reasonable. What else should we be looking at?
Any other markets that you're following that would make sense for us to keep
a closer eye on. That's that's a lot of it. I'm also watching
just in the crypto arena that Bitcoin has some cycles that are certainly have my
attention coming into play in mid to late July, when ideally they would at
a higher high than what we saw in mid April. But if that's going
to be the case, Bitcoin really needs to hold at or above the twenty
five thousand level. But if it does that and rallies into that mid July
time frame, that could be a pretty significant peak in the crypto arena.
All right, but if it breaks twenty five thousand, all bets are off.
Yeah, if it breaks in from a cyclic perspective, I would still
expect an intermediate high in mid to late July, but what it would be
showing is that it's very likely to be a lower high, and it would
still be after that time frame when you would enter another bearish period. Okay,
all right, I'm agreeing with you. There anything else food or to
anything we should really be paying attention to. Well, I'm still pretty somewhat
barish on the greens, thinking that they've got another leg down in soybeans and
corn in particular. By the same token, there are some pretty major cycles,
multi year cycles showing that we could see decisive bottoms in the third quarter
of this year, ideally in the July August time frame. So I think
they've got another leg down, but it we could we could start another bull
market after the next low is set again, ideally in that July August time
frame. All right, here, got a question for you. I'm not
sure if you follow lumber or not, but I like it as a cater
of housing as a possible predictor. You got any info on that. I
only watch lumber very kind of passively look at kind of like you're saying there.
Um, I use it as a as an indicator and look at it
from time to time, but I really haven't it's spent much time on it
lately, so I wouldn't feel comfortable giving a strong opinion on it. Yeah.
Probably interest rates more or less tell you everything you need to know about
housing in the long run, anyway, although the advent of the cash buyer
the expansion is definitely changed things. But based on what you're saying with interest
rate, it's probably peaking. That's probably a net positive for housing, isn't
it. That's that's kind of hard to to say because it depends on the
chicken or the egg syndrome. Um, it could be that housing which really
had such a I guess you wouldn't call it a bubble. That's such a
parabolic move over the last couple of years. Um, it's got the head
winds now of high interest rates. You know, even if interest rates pull
back a little bit, it's they are still a significant um burden on people
looking at buying new houses. You've got supply that was, you know,
they've been struggling so much to keep up with. And you see a lot
of things on the on the horizon as far as supply increasing, and so
it could be that housing is coming down and that's what drives interest rates to
drop. Just again, it's it's in every case, and I talk about
this. I have an axiom in my trading manual that deals with correlations between
individual markets, between factors like this, and it's it can be very deceptive
to look at one thing and think there is a one hundred percent consistent correlation
between that and the other, because the first thing you need to know is
which one is leading the other. Often they move in in coincidence. Like
the old phrase, coincidence does not necessarily mean causality, and so so if
interest rates are going to drop early next year, maybe even late this year,
like I'm expecting, that doesn't necessarily mean that all of a sudden housing
goes up. That maybe that the interest rates are dropping in reaction to housing
coming down. So you have to look at each individually and then start to
kind of see if there's a higher confidence correlation at work there. Right,
Yeah, Well, I'm looking at the housing ETF homes h O m Z,
and it looks like it's triple topping for the year. We had a
top August of twenty two, August sixteenth, we got a higher peak in
February second of twenty three, and now looks like it might have peaked a
little bit lower June thirteenth, which was yesterday. Actually, so that's not
I mean, it's really an indecipherable kind of chart here looking at because it
had up until yesterday, it had definitely had higher lows. So but if
it goes to a lower high, what do we make of this? Well,
it'd be kind of like I was just saying that there's I think there
are that there consists continues to be some headwinds against housing, and and that
it still has some correction to do same gant that big move up that you
saw in twenty twenty one two. So even if it's just a matter of
coming back to a little bit more of an equilibrium point, uh, And
even if that's a rising equalibrium point like a like a rising moving average,
if a market gets too far away from it, it's too high above it,
it ultimately comes back towards it. And and even though that might might
be reaffirming a long term positive trend, in the meantime, while the market's
coming from that, we're blown peak back to the media or the equilibrium point
that's there's there's some pain that's felt during that time. And so that's kind
of what I'm expecting in in housing, that there is just some some correction
that still needs to flesh out from what we saw over the last couple of
years. All Right, Well, I think you've given us a really good
overview of the markets where they're heading. Just tell us, Eric, the
best place to find you these days it is at our main website inside track
treading dot com. That's with the extra I in the middle of inside.
So it's i nsiide track treading dot Com. All right, And there's a
link to it in the show notes to this interview on Financial Survival Network dot
com and hey, go there. You can just click that link and get
right to eric site sign up, and while you're there, to sign up
for a free newsletter. Eric always a pleasure. By the way, if
you got a question for Eric, which I'm sure you do, shoot me
an email k L at Karrie Letz dot com. We'll get you an answer.
Eric always a pleasure. Thanks for coming on, Thanks for heaving me
back carry thanks for listening to Carrie Letz's Financial Survival Network, your solution to
today's trying times. For the latest, go to Financial Survival Network dot com.
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