The Omni Intelligencer

Sell your house faster for more. auction-style-property-sale
  Monday, January 26, 2015  Home > Money > Finance > Investment > Gold is going up or down?
Follow us on Twitter
Every Dollar Helps
Donate using PayPal
Amount:

Gold is going up or down?

| More

The swift sell-off in gold surprised many, as it seemed a foregone conclusion that this gold game was so easy. "Oh yeah, $2,000 gold and beyond is slam dunk — no brainer — don't you know. The U.S. dollar is going into the tank," seemed the sentiment till last week's reality intervened.

What happened? And will gold continue to slide? Let's just take a little retrospective and see if the odds are the top is in on gold.

Let me be clear, though, I don't know if a top is in place. But I want to show you a few charts that suggest this selloff is part and parcel due to the need for liquidity and an indication the currency everyone loves to hate has probably put in a multi-year bottom.

Let's start with the Gold/Silver Ratio vs. Dow Jones Industrial Average (DJIA) Weekly. Now, this isn't a gigantic sample size I grant you. But I think it carries some logic and gives us some insight about the relationship between gold and other risk assets — measured by the DJIA.

As you can see in the chart below, there is a tendency for the gold/silver ratio and DJIA to confirm troughs and peaks:

The correlation of these peaks and troughs in gold and DJIA in the past have represented multi-year moves based on these confirmations. My theory is that silver being more of an industrial metal tends to ebb and flow more closely with risk assets i.e. stocks, thus why this ratio moves in the manner it does.

And what is interesting too, is that the last two peaks in stocks have preceded a break in gold prices by five months. You can see it in the chart below comparing Gold and the Dow Jones Industrial Average Weekly.

We've heard a lot of talk about hedge fund managers liquidating gold positions. It makes sense given that risk assets, stocks and commodities, have been hammered.

When fund managers get margin calls on the bad side of a portfolio, they meet that call by raising cash from the winning side of their portfolio ... in this case that would be gold.

If this is true, and stocks and other risk assets, continue to fall based on the decline in global growth and liquidity, gold should follow stocks lower. And the much vaunted safe-haven appeal of gold could be history.

Was the end of QE2 the bell ringing at the top? The following chart of the Dow Jones Industrial Average Weekly can help answer that.

And the Commodities Index Weekly (CRB) chart looks to be turning over, too.

So if you think global liquidity is in trouble, where is the best place to hide, besides short-term U.S. paper?

I would say the U.S. dollar is looking like it can be a safe haven now. Below is a repeat of the dollar chart I shared last week.

And just like I said then:

"This indicates a real and sustainable move into the dollar. It might be a flight to safety and/or liquidity ... take your pick. And it could eventually turn into something much more this time around."

I have one more question for anyone who believed the dollar was heading into never-never land: Why didn't the U.S. dollar index sink miserably to an all-time-new-low as gold blew off to a new high?

The market will soon share the truth. Stay tuned, but if you own a bunch of gold and are heavily short the U.S. dollar, I think it pays to be careful here.

Source: http://www.moneyandmarkets.com


Sell your house faster for more. auction-style-property-sale
| More
 

Current Headlines - Finance

  • Asia shares inch ahead, euro steady as Fed meets 26 Jan 2015 | 11:29 pm

    Tokyo Stock Exchange staff members work at the bourse at TSE in TokyoThe main European indices were expected to open higher, though foul weather in the United States will curb activity on Wall Street. The Federal Reserve also starts its first policy meeting of the year, in what is a busy week for earnings. Japan's Nikkei gained 1.4 percent, while Australia's main index added 0.8 percent.


  • GLOBAL MARKETS-Asia shares inch ahead, euro steady as Fed meets 26 Jan 2015 | 11:21 pm

    A man walks past electronic boards showing graph of recent fluctuations of Japan's Nikkei average and Japanese yen's exchange rate against U.S. dollar outside brokerage in TokyoThe main European indices were expected to open higher, though foul weather in the United States will curb activity on Wall Street. The Federal Reserve also starts its first policy meeting of the year, in what is a busy week for earnings. Japan's Nikkei gained 1.4 percent, while Australia's main index added 0.8 percent.


  • Lawyer: Boy Scout files depict 'sordid' history of abuse 26 Jan 2015 | 11:13 pm

    This undated file photo provided by the California Department of Justice's official Internet web site, Megan's Law, shows former Boy Scout leader Al Stein who pleaded no contest to felony child endangerment in 2009. Previously sealed Boy Scouts "perversion" files spanning 16 years could soon be in the public eye as part of a negligence lawsuit set for trial Monday, Jan. 26, 2015, in California that was filed against the organization by a victim of Stein's. (AP Photo/California Department of Justice, Megan's Law, File)Opening statements have begun in a lawsuit against the Boy Scouts of America.


  • Two officers shot, suspect killed in Minnesota city hall shooting 26 Jan 2015 | 11:07 pm

    A man shot two police officers shortly after a swearing in ceremony at a city hall in a Minneapolis suburb on Monday night and then was fatally shot by other officers in a rapid exchange of fire, authorities said. The two police officers were in good condition and were expected to survive after the shooting at the city hall in New Hope, Minnesota, Chief Deputy Mike Carlson of the Hennepin County Sheriff's Office told a news conference. Two new officers were sworn in shortly after 7 p.m. near the start of a regular city council meeting and were fired at just after they left the council chambers by an adult male, Carlson said. Council member John Elder, a spokesman for the Minneapolis Police Department, can be heard saying, "Get down, get down, everybody get down.

  • Snowstorm threatens to paralyze the crowded Northeast 26 Jan 2015 | 11:02 pm

    A city sanitation worker steps into his snowplow, Monday, Jan. 26, 2015 in New York. The National Weather Service says accumulations of 18 to 24 inches are possible by Tuesday afternoon. (AP Photo/Mark Lennihan)Tens of millions of people brace for a storm that's expected to deliver hurricane-force winds and heavy snow.


  • Live updates: Northeast braces for 'potentially historic' blizzard 26 Jan 2015 | 10:13 pm

    Francisco Mathurine, of the Times Square Alliance, clears snow from the steps in Father Duffy Square in New York, Monday, Jan. 26, 2015. Officials cautioned Northeast residents to not be misled by a relatively smooth Monday morning commute, and pressed their cautions to prepare for a "crippling and potentially historic" storm that could bury communities from northern New Jersey to southern Maine in up to 2 feet of snow starting later in the day. (AP Photo/Richard Drew)More than 50 million are bracing for a potentially historic winter storm.


  • Northeast U.S. braves 'crippling' blizzard, transit systems shut 26 Jan 2015 | 10:03 pm

    Mid-town Manhattan is pictured from the top of the United Nations building in New YorkBy Jonathan Allen and Barbara Goldberg NEW YORK/MAPLEWOOD, N.J. (Reuters) - A massive, wind-whipped blizzard slammed into the U.S. Northeast on Monday, creating havoc for more than 60 million people and forcing New York City to shut down on a scale not seen since Superstorm Sandy devastated the region in 2012. The potentially historic storm which could affect 20 percent of the U.S. population, caused at least six states up and down the East Coast to declare emergencies, forced the cancellation of thousands of flights, closed schools and major mass transit systems - including the New York City subway. Coastal flood warnings were issued, with tides in the New York metro area expected to be as much 3 feet higher than normal early Tuesday morning. BRIDGES, TUNNELS CLOSE Driving bans in New York, Connecticut and Massachusetts brought the region to a standstill amid near white-out conditions, with the George Washington Bridge, Lincoln and Holland tunnels as well as major mass transportation throughout the city closing at 11 p.m ET (0400 GMT).


  • Microsoft earnings report doesn’t excite market 26 Jan 2015 | 8:17 pm

    SAN FRANCISCO: Big jumps in sales of its Surface tablets, cloud computing software and Lumia smartphones drove Microsoft’s quarterly revenue above expectations, as CEO Satya Nadella continues to steer toward the mobile gadget market and shift Microsoft away from its traditional focus on the PC. Revenue from cloud computing products, in which businesses pay to use online software housed in Microsoft’s data centers, more than doubled. BGC Partners analyst Colin Gillis said investors are reacting to results in Microsoft’s “core” business of Windows software, which he called “not great.” While Nadella is pointing Microsoft toward mobile, the Redmond, Washington, company still relies heavily on selling Windows software for PCs.

  • TE Connectivity nears deal to sell network business to CommScope - WSJ 26 Jan 2015 | 6:08 pm

    (Reuters) - Swiss electronics company TE Connectivity Ltd is said to be nearing a deal to sell its network equipment unit to CommScope Holding Co Inc for about $3 billion, the Wall Street Journal reported, citing people familiar with the matter. The deal does not include the networking business' subsea fibre optics operation, which is used by telecom and oil and gas customers, the Journal reported. The business for sale, called Network Solutions, had net sales of $2.92 billion, or nearly 21% of the company's total, for the year ended Sept. 26, 2014. ...

  • Wall Street left with skeleton crews down as blizzard bears down 26 Jan 2015 | 5:33 pm

    By John McCrank and Richard Leong NEW YORK (Reuters) - A blizzard bearing down on New York hollowed out Wall Street offices on Monday, leaving most investment banks and fund managers with skeleton staffs as many employees opted to work from home. "No one will give me a medal for making it to work after a five-hour commute," said Anurag Bhardwaj, a managing director who works with hedge funds at Barclays Capital in New York, who expected to work from home on Tuesday. Big investment banks, which serve a broad array of clients globally that were not hit by the storm, emphasized they were open for business. "Most brokers down here have already gotten a room in the city and mostly right downtown near the financial district," said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.

The fastest and best way to sell real estate.
auction-style-property-sale