Precious metals and USD sentiment

Troy Bombardia

2020-07-24

Silver's optimism index is at its highest level in years while the U.S. Dollar's optimism index is at its lowest level in years.

The recent precious metals surge pushed silver's Optix to its highest level in years:

While at the same time, the U.S. Dollar's decline pushed its Optix to the lowest level in years:

Such optimism towards silver and pessimism towards the USD was last seen at the precious metals peak in 2011. Before that, this consistently led to pullbacks in silver over the next few months:

And led to rallies in the U.S. Dollar Index over the next 3-6 months:

As for the S&P 500, this led to mixed (but more bearish than random) returns over the next 6 months as the U.S. Dollar rallied:

Gold's VIX surged 2 days ago:

In the past, such large jumps in gold VIX usually led to gold underperforming over the next year:

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