I haven’t been too keen on gold recently.
When the shiny yellow metal finally broke higher back in September, I really thought it was headed for $2,000. But after taking the elevator to $1,800, investors must have gotten distracted by natural disasters, football — or maybe it was the new season of Pawn Stars.
Either way, since October, gold’s seen a steady tumble down the cellar steps…
But yesterday was a little different.
Gold graciously tossed us a couple of bucks and popped above $1,680 for the first time since its New Year’s dump.
While that might help you feel a little better about things this week, it doesn’t do squat when you take a bigger-picture view of gold over the past three years:
In case you’re keeping track, that’s 15 months and counting of “meh” from our favorite precious metal. So we’re stuck in no man’s land between $1,550 and $1,800. Sure, we saw some hamburger-steak gains scattered around last year — but nothing compared to 2009-2011.
The most frustrating truth is that gold is an all-too-obvious bet right now. We live in a land of QE Infinity. And the rally in the U.S. dollar peaked in July (the greenback has been breaking down ever since the calendar flipped to 2013).
I know what you’re probably thinking: How the hell can the dollar and gold both drop at the same time? That’s dumb.
Well, you’re kinda right. They can move together. But probably not forever — just long enough to get under your skin.
That makes me think yesterday’s move could be the start of something bigger for gold. Once the market has you second-guessing the legitimacy of your ideas, it’s probably ready to start behaving again.
Plus, a little more upside could attract some new money and improve the look of our chart. So despite the past few months, gold’s “hurry up and wait” situation looks less awful this morning.
For now, just sit on your hands. Panic isn’t on the table yet — not by a long shot. Gold will reveal its hand soon enough.
Greg Guenthnerfor The Daily Reckoning
In a move that surprised many traders, the International Monetary Fund ended up selling 200 tons of gold to the Reserve Bank of India for $6.7 billion this month. Many expected most, if not all, of the sale to go to China. However, about half the original amount of gold, roughly 200 tons, is still […]
Greg Guenthner, CMT, is the managing editor of The Rude Awakening. Greg is a member of the Market Technicians Association and holds the Chartered Market Technician designation.
Gold is just as dicey as fiat money is. The government will confiscate it when things get hairy just as they did in the 30s. It may never be part of a backing for a reserve currency ever again. You’ll never be able to pay taxes, pay the doctor or buy food or water with it. I think income properties and farm land is the only safe way to go (hard assets that bring cash flow).
In a true world crash, 99.9% will have little credit, no cash savings, nearly all will be living beyond what they actually earn = 0 buyers for your metals, it is that simple. The 0.1%’ers will be buying your gold for $1 ounce that you will sell in order to eat.
But 99.999% of gold bugs feel gold will rocket to infinity, the problem is, the citizen on the streets won’t be earning a million $$$$ each week. Hyperinflation idea goes out the window if the masses don’t somehow get a check for millions each week.
1930′s depression was a DEFLATIONARY depression. The 2010′s depression will be HYPER DEFLATIONARY. I never had a class in economics, but I can understand supply and demand.
Most U.S. citizens subscribe to an idea called the American dream - working hard on a level playing field so you can "get ahead" in life. But that's not what the original "American dream" was all about. As Chris Mayer explains, that term originally referred to a completely different, yet equally important goal. Read on...
The world is awash with data. All these data will shape the future, helping people make smarter decisions and act faster. But to realize this vision, there has to be a way to crunch the data. And with such a huge amount of it, that could be a problem. Luckily, there's a unique solution on the horizon. Sam Volkering explains...
The value of the US dollar has been steadily declining for nearly a century. Thanks to Nixon, Greenspan and a slew of other "leaders" the poor greenback is a sad shell of its former self. But there is a way to reverse this trend, and restore it to its former glory... if only those in power were willing to do it. Peter Ferrara explains...
The word of the day is "growth." With GDP screaming higher in the second quarter it appears social media stocks have taken this as a sign and have started showing their own outsized growth. Today, Greg Guenthner shows you how to play this trend for huge gains as the second half of the year gets in full swing...
Use what analogy you will: a car, a clock, a chemistry experiment... the point remains that the Fed believes it can control the economy. Indeed the Fed will stop at nothing to realize the goals of its dual mandate" to maximize job growth and maintain price stability. But, as Jim Rickards expalins, that conceit always ends in disaster. Read on...