The Omni Intelligencer

Sell your house faster for more. auction-style-property-sale
  Friday, July 03, 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

  • Malaysia PM slams corruption report; says part of political sabotage 3 Jul 2015 | 1:51 am

    Malaysia's Prime Minister Najib Razak , accompanied by his wife Rosmah Mansor, smiles before he boards to a Shinkansen bullet train bound for northern Japan, at Tokyo Station in TokyoBy Praveen Menon KUALA LUMPUR (Reuters) - Malaysian Prime Minister Najib Razak slammed a report that said close to $700 million was wired to his personal account from banks, government agencies and companies linked to the debt-laden state fund 1MDB, claiming this was a "continuation of political sabotage." The Wall Street Journal's report, if true, would be the first time the beleaguered prime minister has been directly linked to accusations of corruption surrounding the fund. "There have been concerted efforts by certain individuals to undermine confidence in our economy, tarnish the government, and remove a democratically elected prime minister," Najib's office said in a statement on his Facebook page.


  • Oil prices drop on rising US rig count, China stock market probe 3 Jul 2015 | 1:32 am

    Investors look at an electronic board showing stock information at a brokerage house in FuyangBy Henning Gloystein and Keith Wallis SINGAPORE (Reuters) - Oil prices dropped on Friday as a rising U.S. rig count stoked fears of oversupply and after Chinese regulators opened an investigation into suspected stock market manipulation. On Thursday, Shanghai's benchmark composite index fell below 4,000 points for the first time since April - a key support level that analysts had expected Beijing to defend.


  • Oil prices drop on rising U.S. rig count, China stock market probe 3 Jul 2015 | 1:28 am

    A petro-industrial factory is reflected in a traffic mirror in Kawasaki near TokyoBy Henning Gloystein and Keith Wallis SINGAPORE (Reuters) - Oil prices dropped on Friday as a rising U.S. rig count stoked fears of oversupply and after Chinese regulators opened an investigation into suspected stock market manipulation. Front-month U.S. crude futures were trading at $56.66 per barrel at 0622 GMT, down 27 cents from their last settlement. U.S. shale producers have brought down the breakeven cost from $35 to $20 per barrel," ANZ bank said on Friday.


  • Malaysia PM says reports alleging corruption part of political sabotage 3 Jul 2015 | 1:09 am

    Malaysian Prime Minister Najib Razak's office said on Friday that media reports claiming he received money in his personal account from banks, government agencies and companies linked to the 1MDB state fund were a "continuation of political sabotage." "There have been concerted efforts by certain individuals to undermine confidence in our economy, tarnish the government, and remove a democratically elected prime minister," Najib's office said in a statement. Najib had close to US$700 million (RM2.63 billion) in deposits from entities linked to 1MDB wired into his personal account, the Wall Street Journal reported earlier on Friday, citing documents from a government probe.

  • China points finger at 'manipulators', as stock market slides 2 Jul 2015 | 11:15 pm

    An investor looks at information displayed on an electronic screen at a brokerage house in ShanghaiChinese stocks fell again on Friday, as the securities regulator said it was investigating suspected market manipulation amid increasingly desperate attempts by Beijing to head off a full-blown crash. A flurry of policy moves over the past week, including an interest rate cut and a relaxation of margin lending rules, have failed to arrest the sell-off, which has started to spill over into some commodities markets such as iron ore and steel. The Shanghai benchmark had slumped below 4,000 points on Thursday for the first time since April - a key support level that analysts had expected Beijing to defend.


  • Brazil cyclist killed at World Police and Fire Games near Washington 2 Jul 2015 | 8:32 pm

    A Brazilian cyclist was killed and two other riders were critically injured in a crash on Thursday during an international bicycle race near Washington, D.C., police said. One cyclist blew out a tire and lost control, colliding with the other two riders at the annual World Police and Fire Games, which drew some 12,000 first responders and law enforcers to compete in sporting events in the Washington area, police said. Carlos Silva, 48, died from his injuries a few hours after the early-afternoon crash in Dumfries, Virginia, about 35 miles (56 km) south of Washington, Prince William County police said.

  • Reigning Miss Universe rebukes Trump for his migrant remarks 2 Jul 2015 | 7:59 pm

    Colombia's Miss Universe Paulina Vega greets fans before she visits injured soldiers at the military hospital in BogotaThe reigning Miss Universe says Donald Trump, the beauty pageant's owner, was "hurtful and unfair" in his comments about Mexican migrants. But Paulina Vega of Colombia says she isn't giving up her crown.


  • California removes 'lynching' language from state law 2 Jul 2015 | 7:42 pm

    FILE- In this April 16, 2015, file photo, California Gov. Jerry Brown talks with reporters after a meeting about the drought at his Capitol office in Sacramento, Calif. California's drought-stricken cities set a record for water conservation, reducing usage 29 percent in May, according to data released by a state agency Wednesday, July 1, 2015. (AP Photo/Rich Pedroncelli, File)California Governor Jerry Brown on Thursday signed a bill striking the word "lynching" from a 1933 law that used the term to describe the crime of trying to take someone from police custody. The bill, which passed unanimously in the state legislature last week, followed outrage over the arrest of African-American activist Maile Hampton on a charge of felony lynching during a "Black Lives Matter" demonstration in Sacramento in January. Hampton's attorney, lawmakers and other supporters rallied behind her at court and on social media, saying it was ironic that she had been charged under a decades-old law originally enacted to protect black detainees from white lynch mobs.


  • Thousands evacuated after freight train derails, catches fire, in Tennessee 2 Jul 2015 | 5:01 pm

    Smoke rises from the site of a train derailment near Maryville, TennesseeA freight train carrying flammable and toxic gas derailed in eastern Tennessee, igniting a fire in one car and spreading noxious fumes that forced the evacuation of more than 5,000 people and the hospitalization of 25, officials said. Homes and businesses were evacuated following the derailment around midnight Wednesday of the CSX Corp train in Blount County, near Maryville, the officials they said. Local officials said the U.S. Environmental Protection Agency was monitoring air quality in the area.


  • Obama draws sharp contrasts with 'mean' Republicans 2 Jul 2015 | 4:36 pm

    President Barack Obama speaks at the University of Wisconsin at La Crosse, in La Crosse, Wis., Thursday, July 2, 2015, about the economy and to promote a proposed Labor Department rule that would make more workers eligible for overtime. (AP Photo/Carolyn Kaster)LA CROSSE, Wis. (AP) — Wading into presidential politics, President Barack Obama on Thursday promoted his brand of middle-class economics by drawing sharp contrasts with "mean" Republicans in a state whose GOP governor was preparing to enter the vast 2016 presidential field.


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