LastBattle
Long

Something's stirring in the gold market

FX:XAUUSD   Gold/U.S. Dollar
10 months ago
A break above 1180 could signal the end of the secular bear market within the larger bull market of gold             , as for the first time gold             made a higher high price since it fell from a peak of 1900.
Current price action is considerately overbought, but every dip was bought up given the fear and global macro.

Next few days we might potentially see Dollar correcting by at least 3% and this will be the catalyst of a 'higher-high' in Gold             vs USD ratio.
snapshot



Yes I'm aware, analysis such as Harry Dent is calling for $700 gold             . I'm unconvinced. Deflation is the trend in the global economy and gold             is an inflation hedge. So why would gold             go up when the global economy is deflating?
Link: http://economyandmarkets.com/markets/gold/gold-5000-maybe-when-youre-dead/

Simple, central banks all around the world are stuck.
In the midst of a market crash and interest rate were still at 0%, not even QE             is having any significant impact in countries like Japan and Europe. Markets are in untested water! They have no other gunpowder to stimulate the economy right now.

Historically gold             rallies in times of a rising interest rate since it is an inflationary hedge, and interest rate rises because the economy is heating up.
Market expectations are changing. From a strong dollar as a result of Janet Yellen not wanting to lose her confidence by rising rates, to macro fears about the global economy. People will be expecting rates to be dropped, or even negative in the following months.

What if the interest rate were to be negative if Central Banks run out of options?
What if more QE             was done?
Why would anyone still want to keep their money in insolvent banks and be charged at a monthly fee?

Gold             isn't just a commodity, it is also a form of money beyond the control of any entity like Bitcoin . The correlation impact of the economy to gold             will be pretty insignificant, considering the bigger picture as a hedge against a risk.



Some other factors includes only 73,000 ounce of gold             remaining in the vaults of COMEX as of 2nd Feb 2016. 542 ounce of paper gold             owner backed by just 1 ounce of physical gold             .
What if these people starts asking for their gold             back with the paper contracts they bought? You can expect a default ahead in the exchange just like the infamous bitcoin exchange, MtGox.
It is simply an accident waiting to happen!

Mike Maloney: https://www.youtube.com/watch?v=7rrLNCRkkas
10 months ago
Comment:
snapshot


Broke above, the momentum is massive.
9 months ago
Comment: Supports: 1190/1160
snapshot

Either grinding down gradually over time to accumulate more buyers or it will start taking off at 1190 range. As long as it does not go lower than 1140, this trade is still valid.

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With regards to a recent article by Charles Sizemore, I disagree.
http://economyandmarkets.com/markets/gold/gold-bugs-dont-get-too-excited/?utm_campaign=coschedule&utm_source=facebook_page&utm_medium=Economy%20and%20Markets

If gold is only an inflationary hedge, why would gold priced in YEN risen since Japan entered the deflationary spiral in early 2000s?

snapshot

http://www.aboutinflation.com/_/rsrc/1369732516464/inflation-rate-historical/japan-inflation-rate-historical-chart/Japan_Inflation_Rate_Historical_1956_2012.png
9 months ago
Comment:
snapshot


Still consolidating, very nice flag and sitting just above the previous October 2015 peak.
Watch out for a move higher soon... $1300~1350, before gold goes sideways for most of 2016.

Related Ideas

manish_damani
10 months ago
I have same view as per you and monthly chart. But standard target I feel 1400 as falling wedge if sustain above 1180-1200 for few weeks only support the target
+1 Reply
LastBattle manish_damani
10 months ago
Yes :) It just made the higher high I mentioned, now is to sustain it for a bit....
Reply
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