In this ratio as well as in DXY/(1+GOLD/2000+SILVER/20) there is a distinct and complete head and shoulders pattern showing further weakness in DXY along with bottoms in gold and silver (but you can see that in their own charts). This ratio is likely to fall along the green path in my analysis. Notice we've broken the floor trendline going back to July.
The rally in DXY today because of inflation numbers will be short lived. There is a majority expectation that high inflation will trigger a quicker Fed response, but the Fed will likely not even be able to finish their tapering which is stated to happen before raising rates.
@gremic thank you! I'm new to this. I really appreciate the encouragement.
p4917
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So you can calculate here something that the USD compared to other currencies (= DXY) gains more strength compared to Gold minus something and SIlver minus something. And then create a certain chart where you can draw a line and so on but for the concrete value - take a simple look on the Gold or Silver chart and f*ck the DXY, because the DXY calculates ONLY the strength within the currencies. If you want to compare the dollar to Gold and/or Silver take a look at XAU/USD or XAG/USD. ;)
rrmhearts
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@p4917, Sure, if you wanted to look at only one, go for it. But if you want to look for a chart that shows "the true value of USD relative to currencies and alternative money," how would you compute it? BTCUSD is hard to include because it completely consumes the chart because of it's rate of growth. I have another post somewhere that includes a crypto ETF. But how do measure USD as a store of value?
p4917
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@rrmhearts, as I said - take a look at XAU/USD. ;) The DXY gives you only the proportional rate in which one trash (USD) has more or less value than the other trash (JPY, CNY, ...). If you want to analyze the value of the US economy / USD you could take the SPY and divide it by the money supply or things like that (just one idea which popped up in my head).