What I Am Looking At While Waiting For A Major Breakout In Precious Metals (Or For Godot*…)

In my opinion, there is a good chance that precious metals will finally break above the latest cyclical tops established in July / August 2016. 

However, to do it, gold has to be stronger than the US dollar using an absolute measure. Or, in other words, applying the concept of the goldollar index:
 

source: Simple Digressions

As the chart shows, most recently gold and the goldollar index have bounced off their strong resistance (two horizontal lines and blue arrows). In my opinion, a major breakout will be only valid when both instruments break above their resistance at the same time (more or less). It means that a prudent speculator should closely watch the way gold and the goldollar index perform. 

As always, the devils is in the details but at this point the issue is quite simple. As long as gold and the goldollar index do not break together – be careful.

* – “Waiting for Godot” – a play by Samuel Beckett