Greg Guenthner

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:

Gold Price Since 2010

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 Guenthner
for The Daily Reckoning

You May Also Like:


Diwali, Dollars and Gold

Frank Holmes

November 5 marked the beginning of Diwali festival in India and the next stage in gold’s seasonal patterns. The five day “Festival of Lights” is a major Hindu holiday and involves the lighting of small clay lamps (diyas) filled with oil to signify the triumph of good over evil. During Diwali, lights illuminate every corner […]

Greg Guenthner

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.

  • AIM

    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).

  • Moochers Suk

    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.

Recent Articles

Peter Thiel Explains What Backs the U.S. Dollar

Chris Mayer

In a recent interview, Peter Thiel gave a simple and clear explanation of what gives the U.S. dollar its power. “It surprised me,” writes Chris Mayer, “because I had not heard anyone but fringe economists give it. And yet it is the key to understanding modern money.” Chris revisits the idea… including some radical ideas “that will change the way you think of money and the economy forever.”


Could Steak Really Cause Arthritis?

Stephen Petranek

Can you really eat more salt? Is arthritis caused by steak? Are artificial sweeteners really Satan’s sugar? Stephen Petranek comes clean about 2014’s wackiest health recommendations in his new series on “The Truth About MD Warnings.”


Now’s the Time to Buy Housing Stocks – While They’re Cheap

Greg Guenthner

So let me point out one of the new clues for you: construction hiring is actually on the mend after years of decline. Contractors added 48,000 jobs in December, according to the latest numbers. Full-year numbers were also better than expected, clocking in at 9-year highs. Why is no one talking about that?


The Currency Wars’ “Pearl Harbor”

James Rickards

The most dramatic battle yet in the currency wars took place last Thursday. It was the financial equivalent of a Pearl Harbor sneak attack. Jim Rickards has the full story... what it means moving forward... and a lesson for all gold investors...


Why Oil Can’t Stay Cheap

Byron King

As consumers, you want to see low prices at the pump. But for investors who've been riding the American fracking boom, are these low prices a death knell? Byron’s advice to you, as an investor with exposure to energy stocks, is to not panic in the face of short-term market turmoil. And Byron’s got two picks primed to rebound…