<b>CHART</b>: <b>Gold price</b> vs rates shows rally catalyst 'already in place <b>...</b> |
- <b>CHART</b>: <b>Gold price</b> vs rates shows rally catalyst 'already in place <b>...</b>
- <b>Gold price</b> | <b>CHART</b>: <b><b>Gold price</b></b> vs rates shows rally catalyst <b>...</b>
- <b>CHART</b>: <b>Gold price</b> vs rates shows rally catalyst 'already in place
| <b>CHART</b>: <b>Gold price</b> vs rates shows rally catalyst 'already in place <b>...</b> Posted: 03 Jun 2014 12:46 PM PDT A number of gold market analysts have made the case that the one major factor influencing the price of gold is US inflation-adjusted interest rates and that the correlation is so strong that the gold price can be used as a predictor of rates, serving as an early warning system on both the direction and magnitude of moves. The underlying reason for the relationship is that as yields rise, the opportunity costs of holding gold increases because the metal is not income producing. Higher rates also boost the value of the dollar which usually move in the opposite direction of the gold price. Recently though this inverse correlation is between US 10-year real yields (Treasury Inflation Protected Securities or TIPS) and the price of gold has broken down. The 10-year TIPS is currently at 0.32% (which is consistent with a gold price north of $1,400), down from 0.68% two months ago. In a new research note Julian Jessop Head of Commodities Research at Capital Economics says this is a bullish sign for the gold price: "This decline at least partly reflects growing speculation that the neutral level for official interest rates in the longer term has fallen, which should reduce the opportunity cost of holding gold," says Jessop. The independent macro-economic research house notes based on the decoupling evident on this graph "there is already a catalyst in place for a near-term rally in the price of the precious metal". While US rates have not risen as expected, Europe's central bank is on the verge of moving rates below zero and may launch a full-blown quantitative easing program later this year and Japan is likely to extend its asset purchases through 2015. "Unless there is a decisive move below $1,200 per ounce, which seems unlikely given the (rising) floor set by mining costs, we are therefore retaining our end-2014 forecast of $1,450," the report concludes.  Source: Capital Economics  | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| <b>Gold price</b> | <b>CHART</b>: <b><b>Gold price</b></b> vs rates shows rally catalyst <b>...</b> Posted: 07 Jun 2014 11:05 AM PDT
The GOLD PRICE climbed $9.00 (0.72%) today to $1,253.00. Silver rose also, 28.9 cents (1.54%) to 1905.5c, over 1900c for the first time in five days. Silver's volume rose strongly, but the SILVER PRICE has passed no milestones. 20 DMA stands above at 1922c. Indicators are moving toward the upside, but no proof yet. The GOLD PRICE RSI is coming up from a very overbought reading. Full stochastics are scraping bottom, ready to rise. MACD might be ready to rise. So we have silver and gold prices higher today, but without any solid confirmation that they have indeed reversed. I've been suckered so many times that I want some proof. But do watch out. Silver can move with blinding speed when it turns. By fall silver and gold prices at these levels will seem absurd. Today the European Criminal Bank announced it was trimming its main lending rate from 0.25% to 01.5%. It also instituted a CHARGE (but called a "negative deposit rate") on bank reserves parked at the central bank, lowering that rate from zero to -.1%. On its marginal lending facility the ECB cut the rate from 0.75% to 0.40%. Charging banks for parking reserves with the ECB is supposed to flush them out of the bushes and make them lend. We'll see, as no other central bank has tried this trick. Other technical measures will also add to euro inflation. On a huge trading range (1.2%, from $1.3503 to $1.3670) the euro shot up 0.46% to $1.3663. That close took it above its 200 day moving average and left it not far below its 20 Dma (1.3676). The shorts got caught short. This action shows how loony, how goofy, these central bank denominated markets have become. Now think: interest rates chiefly determine currency exchange rates, along with inflation expectations: higher the rates, more desirable the currency; lower the inflation, more desirable the currency. The ECB just CUT its interest rate to inflate the currency more, and the euro rose. Give the euro a week or two, then gravity will reassert itself. The European criminals are taking the same path Bernanke and the US criminals have taken, guaranteeing perpetually rising stock markets by keeping the new money flowing. This will end in tears, wailing, and gnashing of teeth. But who knows? I'm only a nacheral born fool from Tennessee. Maybe in Europe pigs do have wings and anvils can fly. Some 56% or so of the US Dollar Index is made up of the euro, so big gains in the euro translate to big losses in the US dollar index. Dollar hit a high of 81.07 before turning and sinking to close at 80.39, down 33 basis points (0.42%). From 8:00 Eastern Time until the ECB announcement about 8:30 the dollar was climbing, then commenced dropping and kept on dropping all day. Yen rose 0.32% to 97.66, which didn't paint much of a splash on the chart. On the other hand, today could end the dollar's promise of a rally. Yield on the US 10 year treasury note fell 0.84% to close at 2.584%. That means that both bonds AND stocks rose today, a right rare occurrence. Stocks went hog wild at the prospect of money printing spreading around the globe. Dow made a new all time high, up 98.35 (0.6%) to 16,835.88. S&P500 made its seventh new high in eight days, rising 12.54 (0.65%) to 1,940.42. Folks, when the thought that crosses your mind is "It don't get no better than this," it probably won't. Now here's an odd and intriguing observation. While the Dow and S&P500 have been making new highs, the Dow in Gold and Dow in Silver have turned down. Oh, nothing dispositively certainyet, but still down. Dow in silver hit its overhead resistance line at 892.99 oz (S$1,154.57 silver dollars) on 1 June and bounced down. Today it dropped 0.98% to 882.26 oz (S$1,140.70). Chart is right here, http://scharts.co/Tj9TcZ RSI, MACD, Rate of Change, and full stochastic are all rolling over. But I'd like to see confirmation with a close below the 20 DMA at 864.84 oz (S$1,118.18). My maximum upside target has been and remains 912 oz (S$1,179.15). Dow in gold chart can be seen here, http://scharts.co/1unBfMx Since June 1 it has stalled, but only sideways. Today dropped 0.18% to 13,43 oz (G$277.62 gold dollars). Indicators are trying to roll over but no strong confirmation yet. - Franklin Sanders, The Moneychanger © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| <b>CHART</b>: <b>Gold price</b> vs rates shows rally catalyst 'already in place Posted: 07 Jun 2014 02:12 PM PDT
The GOLD PRICE lost a nothing 90 cents today to close at $1,252.10, but it's above $1,250. Way up above at $1,275 stands the 20 day moving average, first milestone that will prove gold has turned its face skyward. Really the gold price needs to rise above $1,280 where it broke down. $1,295 and the 200 dma would be better still. The RSI shows the gold price rising up from a severely oversold condition. Full stochastics have been as oversold as they've been in the last 12 years. MACD is trying to turn up. But all this must be confirmed by the only indicator that counts: higher price. The SILVER PRICE dropped 9.2 cents to 1896.3c, but traded most of the say above 1900c. As with gold price is the only indicator that counts in the end. For silver, that means climbing above 1950c, then over 2050c. Both silver and GOLD PRICES seasonally post lows in June-July, so we might see one spike move down. Everything is in place, however, for a reversal -- they just haven't reversed yet. If I told y'all that silver rose more than the Dow or the S&P500 last week, y'all would tell me I was lying and throw a pop bottle at my head, but just you look. Silver rose 1.7% this week but the Dow only rose a piddling 1.2% and the S&P500 rose 1.3%. Those are just the numbers. Gold rose 1/2% while the US dollar index stayed plumb pancake flat, didn't move ne'er a hair. Platinum rose only 30 cents. I reckon it makes a difference who writes the headlines. Which reminds me, who gets to pick the news? Did y'all notice that whatever some lamebrain in New York or Washington says is news is what they spotlight? Obama Administration is good at this, floating a new crisis every week as "news" when actually it's either "olds" or just their agenda. But the news from the yankee government was good today for Wall Street, the unemployment is steady and jobs have grown by over 200,000 a month for the last three months. Now if you all have never heard SHAMELESS LYING before you heard it from this lying report. I'm just a nacheral born fool from Tennessee, but I know to go to the St. Louis Fed's database Fred and look up Civilian Labor Force Participation and see that it's now at 62.9%, against a high in July 1997 (right, 17 years ago) of 68.1%. 62.9 is itself a level not seen since May 1978. Then I went and read what John Williams of www.shadowstats.com had to say. John is an expert in unravelling their statistical lies, and he says unemployment is closer to 23% and the gimmicks the Bureau of Labor Statistics uses overstate job growth by 200,000 a month. But welcome to America, where the truth don't count, only the illusion of an economy. Stocks rose again to new highs, the eighth out of the last 10 days for the S&P500. It rose 8.98 (0.46%) to 1,949.44. Dow rose 88.17 90.52%) to 16,924.28. Both have now poked through overhead resistance lines. They could break down here -- new highs on 8/10 days is not a sequence nature encourages -- or they could go wilder still, although both have reached overbought territory. But overbought can get overboughter still. The end lieth not far away. About now it's getting time to sell stocks and put the proceeds into silver and gold. The Dow in Gold today rose 0.59% to end at 13.51 oz (G$279.28 gold dollars), a new high for the move since March, but not nearly the high for the move, which remains 13.80 oz (G$285.27) last December. It's likely forming a double top here, but that has to be confirmed by a reversal. Dow in Silver gained 0.66% to end at 890.75 oz (S$1,151.35). It has bounced off its upper resistance line this week, but needs to drop through the 20 DMA (866.37 oz) to confirm a reversal. I don't expect it can get higher than 912 oz (S$1,179.15), and may have already turned. Wasn't a shining week for the US dollar index. Yesterday's announcement from the criminals at the ECB sent the dollar up first to 81.07, then it collapsed all the way to 80.39 Today it ended where it began the week, at 80.43, just above the 20 DMA at 80.31, but below the 200 DMA at 80.48. Has the dollar aborted its uptrend? I don't know, but watch 80.20, even 80.05, the 50 DMA. It ought to hold those if it aims to rise. Euro collapsed from 1.3993 in early may all the way to $1.3503 when it bounced back yesterday. Today it lost 0.13% to $1.3645. The enthusiasm spawned by the ECB's announcement it would inflate the snot out of the euro will wear off in two weeks at most, and it will commence sinking again. The yen continues to slide sideways, losing 0.11% today to 97.55, below all its moving averages. Yet the yen abideth still in the same range it hath inhabited since 2014 began, from 94.83 to 99.24. Nothing happening here. The 10 year treasury yield in the last week has been working to undo its breakdown in early May. Remember that suppressing interest rates is the key to the central banks' house of cards. Once the market takes control and starts raising rates, the central banks are cooked. Watch thos einterest rates for the first sign of trouble. On 6 June 1934 US President Franklin Roosevelt signed the Securities Exchange Act establishing the Securities and Exchange Commission so that wholesale fraud upon the American public could be supervised by government authorities. Next week I will be travelling so won't publish commentaries any day but Monday, unless I just have time and take a notion. Y'all enjoy your weekend! Aurum et argentum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. |
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