The Dollar’s Decline vs Gold (Uncut) 02-12-2025

The Dollar’s Decline vs Gold | Talking Trades

This is a visual of the US dollar losing its purchasing power to gold. So if we’re going to measure the price of something, let’s not do it using the US dollar, let’s do it using gold. We’re setting a bit of a historic precedent here.

Was it really that event that caused the rally to go up? The economy is going to start suffering pain. Welcome everybody back to Talking Trades, Kevin Wadsworth and myself, Patrick Karim. And guys, the charts Kevin is going to show you today, you’re going to go bonkers because he’s going to show you the truth about the tech stocks, the Magnificent Seven.

But he’s going to use not the fiat lens to analyze them, but the gold lens. And I can’t wait for Kevin to start this. So Kevin, please show everybody, shock and awe the crowd with these charts priced in gold.

Okay, Pat, thanks for that build up there. I hope it lives up to it. Yeah, so we can look at these tech stocks priced in US dollars, of course, and that’s what everybody does.

You pull up the chart for Google or Amazon or Apple, Microsoft, whatever it happens to be. And you look at it priced in US dollars. It’s just what everybody does.

It’s your first sort of natural instinct. I’m going to share the computer screen with you now. And this is the chart for Google Alphabet.

And you can see priced in US dollars, it looks great, doesn’t it? The chart’s going up and no major problems there. And you look at Amazon and the Amazon chart’s going up and no major problems and so on and so forth. But let’s skip down to using gold as a way of analyzing these charts.

So what would happen if instead of using the US dollar as your denominator here, your pricing metric, what if you used gold? Because we know that gold is in a bull market, don’t we? So instead of pricing things in a unit that we know is losing value, i.e. the US dollar, that’s always going to make things artificially look as though they’re doing well. Why don’t we price things in gold instead? Because we know that gold is outperforming the US dollar. Or put another way, the US dollar is losing its purchasing power with respect to gold.

We’ve already seen the gold chart. I can quickly go back to the gold chart and show you the gold chart. This is gold versus the US dollar.

And you can see these breakouts that are occurring with gold versus the US dollar. And we’ve moved all the way up from $1,300 in 2019 to $1,900 or $2,000 just a year or so ago. And now we’re approaching $3,000.

So this is a visual of the US dollar losing its purchasing power to gold. So if we’re going to measure the price of something, let’s not do it using the US dollar. Let’s do it using gold.

So let’s start with Tesla and look at the chart for Tesla. And this is Tesla versus gold. Now, that’s starting to not look quite so promising, isn’t it? You can see that the chart for Tesla, and I’ll just put some moving averages on here.

We’ll put the 12-month moving average on and put the four-year moving average on as well. And you can see that the chart for Tesla is showing some weakness here as a series of lower highs. It’s just popped up into the Ichimoku cloud there, but it’s showing signs of breaking down again.

So it looks at best neutral versus gold, shall we say. It’s been in effectively a sideways consolidation for four years, all the way back to 2021. Tesla has not outperformed gold.

And that might surprise quite a few people. Tesla has not outperformed gold for four years. Moving on to Microsoft.

And once again, the chart doesn’t look particularly bullish, does it? I mean, it’s breaking down to some extent. In fact, to quite a large extent, in fact. It’s breaking down below a rising trend line.

It’s also broken down below a horizontal support and resistance line. It’s also broken down below both the three-year and the four-year moving average. That green line there is the four-year moving average.

So it’s breaking down below levels that it should be above in a bull market. You can see in the bull market, it was above that green line. It was above the Ichimoku cloud as well, this cloud structure here.

And if we actually zoom right out, you can see that when we have a massive tech bull market and gold goes into hibernation mode, the chart moves strongly to the upside. And when we have a massive bull market in gold and a tech collapse, the chart breaks down. Bull market in tech and bear market in gold as it goes up.

So now what’s happening is that you can go all the way back to 2021 and Microsoft has not outperformed gold since 2021 over that entire period. It’s underperformed it, it’s outperformed it, and now it’s underperforming again. The net result is overall Microsoft has not made any progress against gold since 2021.

And that’s the first piece of the jigsaw puzzle that you need to put in place for the breakdown to occur. You need to halt the rise and you need to begin to see the chart slowing down, going sideways, and then breaking to the downside. So this supports the idea that gold is starting to enter a period of outperformance versus Microsoft versus Google, the same sort of thing.

You see that high point there back in 2021 where we put in a lower high last year and we just put in a lower high again this year. So that’s two lower highs and you can clearly see the weakness that’s developing here. Back test.

Now the only other piece of this jigsaw puzzle is to break down through this red circle below the supporting moving averages in the Ichimoku cloud. And as soon as that happens, that will be confirming for us that a new downtrend is developing. So it doesn’t look particularly strong.

And again, Google has not outperformed gold since 2021. Amazon. Take a look at Amazon and you can go all the way back to 2018 with Amazon.

And since 2018, which is a period of seven years, Amazon has not outperformed gold for seven years. It’s hit a barrier. It’s broken down, in fact, below the Ichimoku cloud there briefly, and it’s now struggling to hold on to any gains that it’s making versus gold.

So this area needs to be watched very, very closely for a resolution. We’ve broken out above the resistance barely. So we now need to get some confirmation to see if Amazon is going to continue to outperform gold or whether it’s going to roll over into a bear market versus gold.

Look at Apple versus gold. It has not outperformed the yellow metal again since 2021. So those peaks in 2021, important actually, because when you look at the Nasdaq, the same can be said for the Nasdaq, has not outperformed gold over that four year period.

And in fact, Nasdaq is below the highs that it made at the peak of the last gold bull market. So you go all the way back to 2011 and Nasdaq has not outperformed gold since then. Meta.

If you look at Meta, this one’s a little bit better, has put in a higher high, but it’s a clear sort of expanding what we call an expanding megaphone pattern. These are very unstable chart patterns and they’re prone to very large swings in both directions. So we are actually quite close to the upper resistance level on this chart.

So the logical conclusion, I suppose, would be that we don’t have very much upside on this chart, but we have a heck of a lot of downside. And again, it’s a case of watching for evidence, not just from this chart, but from other sources as well. Turning to Nvidia versus gold.

Well, this is an interesting chart because Nvidia versus gold has actually broken down. And you can see all these very, very nice measured moves that Nvidia does. Equal measured moves.

There’s one there, a second one there, a third one there, a fourth one there. Very predictable sort of cyclical behavior, if you like, where Nvidia outperforms gold, then pulls back to support, outperforms gold. And in order to pull back to the support level here, it’s going to need gold to outperform Nvidia by 66%.

And when you look at the chart for Nvidia itself, that has broken down as well. So in fact, Nvidia and Microsoft are two of the weakest charts in the tech sector there. And they’re both $3 trillion companies, two of the huge, huge companies in the NASDAQ there.

So big, big implications if both Microsoft and Nvidia continue to show this kind of weakness. They are desperately trying to hang on to current price levels. If we start to see any gathering of momentum to the downside, then that will be very, very bad news for tech stocks more generally, and will hasten the progress towards a capital rotation event.

So pricing things in gold, Pat, is, shall we say, illuminating. And as this process continues, and as the capital rotation event gathers pace, I suspect the clues that we get from the ratio charts versus gold are going to be very, very key, very, very important to watch. Thanks, Kev.

That was brilliant. Guys, thanks for joining us. Make sure to subscribe and like to get more content like this.

Thanks, guys.