AndyM
Short

Gold to decline massively with SPX sell-off. Same as 2008.

FX:EURUSD   Euro Fx/U.S. Dollar
154 7 8
Good morning all.
I was playing with the correlation of SPX             vs EUR vs XAU , specifically I was interested in the reaction of the market to the dollar and Gold             in the times of the crisis.
What I discovered was that in 2008 both EUR and Gold             declined till the very end of wave 3 of the sell-off in SPX             .
That means that till almost the very end of the panic Gold             was not viewed as a protective asset, but the Dollar was.
In the light of the forthcoming SPX             sell-off I think the scenario will repeat itself, as nothing really changed in the relative perception of those two assets (It's actually worse for Gold             these days: speculators hate it).

What this will mean for us is that when SPX             starts declining (it will!) a massive decline in Gold             will happen during the first part of the crisis, combined with the strengthening of the dollar. Then both may reverse.

In that light I am updating the wave count for Gold             , which I will publish shortly.
Dollar is a pretty liquid asset, you can easily obtain it after dumping your shares but not gold (especially physical bullion)
In times of a larger economical uncertainly, gold will be a better protective asset than Dollar. 2008 collapse largely solved by swift action by US government to bailout...

In my opinion even if SPX does start dumping now, it'll only affect gold in the short term but not the larger trend which is a secular bull market right now.
+1 Reply
IvanLabrie PRO LastBattle
Gold still looks bearish in all timeframes though.
Heavy sell pressure on it, keeping it from rising.
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