Daily Digger

[Charmin]

Gold continues to trade "mirror image" to the Dollar. We anticipate Dollar strength to last no more than two more weeks, which is likely to set in a major low in the XAU as it seems destined to reach the 90.50.

http://www.feargreed.com

 

Let's see how the cycles and everything lines up in the next two weeks. The market of stocks may see a bounce here - PM bottoming?

[Charmin]

as crude comes under pressure - POG "should" begin to move the ratio higher for a possible trend channel building. If we build cause above 9 then it's a positive development

[Charmin]

We need to see the quality of any upthrust in Uncle DX above 84 if it materializes. If it finds no demand it will seek support lower. Just where that support is for now looks like the 82 area. We'll have to see. Very interesting how Feargreed Dude has pegged 2 weeks at the most for uncle Buck

 

Everyone, including high profile people "say" DX will go down.... but, I wouldn't bet the farm on it just yet...

http://www.joe-duarte.com/free/commentary_...ncial_sense.asp

[Charmin]

Feargreed dude notes:

"Bullish multi-week divergences have been building in our Volume Demand Index (VDI). We expect a triple bullish momentum divergence to be registered this coming week. It will take a Daily close under 88.31 on Jan. 31 to bust this formation and extend the decline"

[DrStool]

Looks Can Be Deceiving

 

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[Goldilocks]

I posted this in B4 just in time for the weekend thread to be closed on it.... Any thoughts?

 

 

"Sounds like he is inferentially predicting a bond rally."

 

See. This is the part I don't get. When I pull up 5 year weekly charts of the 10 year bond and Gold at stockcharts.... They do not inverse well for much of the time.

In fact, from April of 2001 to June of 2003, as rates dropped and Bonds rose, Gold also rose. Historically this is abnormal (Look at interest rates and gold prices in the very early 1980's). Then, from June 2003 to Early 2005 Gold has continued to rise and interest rates have risen while bonds dropped.

Gold seems to be doing what it damn well pleases in other words.

This makes sense when you look at it as a turning point in a cycle that began in the late 70's early 80's. Gold and rates were topping out then. Now they are (may be) bottoming. Gold first apparently, with rates to chase it up and hide the inflation hidden so well and so long.

I think what may be happening is the 22+ year run of Rates and Gold dropping while Real Estate, Stocks, and Bonds rose is in trouble and Gold is the early rising signalman out on the tracks.

I think either way now we may be looking at gold rising. He may have to dodge off the tracks and hit the dirt here and there but he should pick himself up faster every time.

 

1 - If Rates drop and bonds rise, so should gold, as it has for several years. This I would recognize as smart/long term money positioning itself for what it sees as an inevitable huge turn. Taking advantage of time being allocated as rates are artificially held down by various forces.

 

2 - Rates begin to rise in a frantic effort to save the dollar (IE it is harder for the US government to borrow - IE fear begins building that Uncle Sam and his buck are in trouble - IE Gold will eventually get some real legs)

It is this scenario that I think a lot of people may be having problems with. Many people think that Rising rates are needed to save the dollar, the faster the better. I disagree. I think that such would signal some folks to panic first and often. The kind of folks who may already be discreetly doing so.

 

So, if Prechter is saying The dollar will be King - Bonds that pay Interest in dollars should also be King even if it is low interest. As NWD asserts. Which, in recent times has also meant Gold has risen.

 

BUT everyone says - if the dollar is King then Gold is trash, this is OBVIOUS.

 

See. This I also don't get. Stockcharts has a curious feature if you are a member. On weekly candlestickcharts (TELL NO ONE ABOUT THIS - ESPECIALLY NOT CHIP), and on monthly Line charts you can go out to 1990. BUT, if you then go up to your browser address window and change 1990 to oh, let's say 1980, then Voila! You get a real long term chart. Now, what I notice here is:

1. Gold hit $727 in 1980, crashed very hard, went largely sideways to down for a while and finished double bottoming in 2001 at $255.

2. USD hit $164.72 in early 1985, crashed very hard and went largely sideways for a while and is either putting in what could be a massive quadruple bottom right now or is trying to poke a hole in a triple bottom floor.

 

Anyway,

In that time (From the early 80's on) there were many inverse moves (IE Decemberish of 1987 saw a low for the dollar, and a high for Gold) BUT the overall large scale charts look VERY similar.

 

So....If the dollar were to rally huge, why should that not continue to be bullish for Gold and it's fast disappearing cousin? Over the long run I mean. Because in the long run those charts do look similar.

 

Of course, they could just reflect that Gold is no longer seen as it once was, and is getting weaker as a result and ditto now for the dollar.

 

Who knows. Any Shadows here?

 

 

 

What I think my point is.... I think that Gold and the Dollar are not so closely correlated in an inverse manner as everyone believes. Yes, many of the smaller year to year moves are but something is deeply disturbing to me in examing those two charts and finding an eery simlarity in their movement.

 

 

Why the similarity? Does anyone else see it?

[Charmin]

NEM holding 41.35 or springing from that level would be a good sign that it and POG won't go into a triple waterfall down.....

 

Draw a line at 41.35

[MrHankydoesWallStreet]

I think that Gold and the Dollar are not so closely correlated in an inverse manner as everyone believes.

 

 

Actually gold has a much stronger correlation to real interest rates and rallies strongly during periods of negative real interest rates = rates below inflation.

I forget where I saw this analysis and charts...see if I can dig it up.

 

I believe even though we are finally seeing the Fed raise...as usual they are behind the curve and I agree with Puplava we are about to see inflation really heat up...so anyway real rates will continue to be negative and gold will continue to go up.

 

A falling dollar is inflationary and tends to put us into negative real rates so some correlation results but not always.

 

 

Currently LONG UNWPX

 

 

Hank

[GRINCH]

bear: the base of my triangle extends back to 1976....we have broken from the apex and the move will be well above $1000

[traderfromhell]

I think that Gold and the Dollar are not so closely correlated in an inverse manner as everyone believes.

 

 

Actually gold has a much stronger correlation to real interest rates and rallies strongly during periods of negative real interest rates = rates below inflation.

I forget where I saw this analysis and charts...see if I can dig it up.

 

I believe even though we are finally seeing the Fed raise...as usual they are behind the curve and I agree with Puplava we are about to see inflation really heat up...so anyway real rates will continue to be negative and gold will continue to go up.

 

A falling dollar is inflationary and tends to put us into negative real rates so some correlation results but not always.

 

 

Currently LONG UNWPX

 

 

Hank

<{POST_SNAPBACK}>

 

 

Hank isn't funny the U thread died a quick death? As Dines says this truly is a stealth bull market. Denison has doubled since early November while the goldbugs stocks die a slow death. I wouldn't be a seller here but it goes to show you which market is the one to pay attention to now. I like CCJ DEN.TO STM.V UEX and some others. Look at the uranium stocks guys.