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Thursday, December 4, 2014

Gold ex-US dollar charts for this morning


Well, thankfully Draghi did nothing to gold, just like he did nothing to anything else this morning either. Poor guy - if I were him I would actually quit my job, then go to a newspaper of record and explain in detail how pig-headed the Euro-austerians are and how asinine their economic beliefs are.

Sometimes you need to sacrifice yourself for the good of the people.

Anyway, here's what I am interested in:


That line there defined the top of the horizontal trend, and now gold ex-USD has popped above it.

Which might mean nothing, it might pop back below it. But if gold-USD correlation was -0.96 over the past few months as Mickey Fulp said (and remember, he's admitted that he lied to get out of university stats class), I'd think that has to break down at some point.

Cuz gold is supposed to correlate to other things too. Otherwise, it's a magical currency with a fundamental value determined by God. Which is silly.

But if it does correlate to other things, it shouldn't correlate -0.96 to USD, right? Unless all those other supposed inputs to the gold price (10s-2s, US real rates, US inflation, fear of imminent war, Chinese corruption, Indian weddings ha ha) also correlate at a very high rate to the US dollar.

That chart up there does have some neat TA things: first, the fourth-last and third-last candle together depict a fakeout and recovery of the EMA(11). Also, the third-last (the big white candle) totally engulfs the nine candles before it, which I guess TAs would call a very strong affirmation of a coming upward move.

The very next day after the big white candle, the price overcame overhead resistance that had been tested 4 times before in the past 6 months. So that makes the big white candle even more bullish, I guess, according to TAs, not that it matters what they think. But that's where we are now.

So I guess a TA would say we shouldn't even expect to see a retest of the resistance-support line, at least not soon.

Anyway, point being that as long as GLD:UDN stays above 4.75 or so, this is a new and interesting thing, and other interesting things could come from it. And that's the only reason I'm interested.

However:


Thing about the weekly chart is that yes, $GOLD:UDN is above its SMA(50) right now, but it's not really giving us any reason to expect it to move out of the 48-50 range for the next few months. I mean, it could just stay here forever.

Though staying in this range would still mean gold going up in tandem with the US dollar, which I'd think would have to freak out the market eventually, no? It'd suddenly not be a magical God-ordained antidollar, and that's just freaky.

So maybe this long gold trade is going to be a very slow, very long trade? Maybe gold goes almost nowhere for the next three months. Like, maybe a very slow rise to $1300 with lots of ups and downs along the way.

I'm not hoping for anything, I'm just fairly certain I might have identified an interesting inflection point.

We'll see.


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