Sometimes we find technical charts very useful in divining the immediate outlook for markets. Clive Maund’s excellent latest gold market update (click here) highlights the potential for a dollar rally over the next few weeks and shows how the professional currency traders have unwound their euro positions in preparation.

From a fundamental perspective you can understand why they are doing this. Stock markets are perilously high for such a dismal economic outlook. When stocks fall the US dollar and US bonds rally. It is as automatic as the conversion of shares into cash.

Important lesson

Mr. Maund’s analysis cleverly takes this a stage further and concludes that this will be a false or at least very short rally for the US dollar. After that the dollar plunges off the edge of a cliff, fiscal or not, and into the abyss of QE3 money printing.

So if you cash out of stocks this month you should not stay in cash. Where should you put your money if you’re worried about the dollar and T-bonds? What other option except gold and silver do you have?

But be careful, gold and silver prices could also get quite a whack from a falling stock market, so wait for your moment, advises Mr. Maund, though we wonder how much the rotation from cash to precious metals will support prices during this sell-off.

This could be the final cue for the real lift-off in precious metal prices as a currency that nobody can print in an age of central bank money printing. They are all at it in a race to debase their currencies before their economies implode with debt. Those implosions are about to start.

Gold and silver will soar in value in this phase of their bull market. Most other assets will struggle and some will fall very badly.