Post by TradingForGod on Aug 25, 2004 5:52:48 GMT -5
Thar’s GOOOOLLLLD in them thar hills. From as far back in recorded history as you want to go, gold has been a highly sought after prize. It still is today, but with modern extraction methods you no longer have to find golden nuggets in a stream of thick veins in a mountain shaft. Huge earth movers scoop up mountains of dirt containing gold deposits so diffuse you almost can’t see it. And yet when the processing is over you still get beautiful gold bars. That’s pretty amazing to me.
Gold has turned into something of an industrial metal, used in electronics and telecommunications as well as optics and lasers. (Did you know that the 21-inch secondary mirrors on the Keck telescopes at Mauna Kea, Hawaii are coated with pure gold?) As a result, it has lost a bit of its “luster” as a boutique metal. Even still, it the most closely followed metal traded in the world. People still look at it as somewhat of bellwether for economic strength and potential inflation. So I thought we would look at it today.
Gold has been in a large, uptrend since the start of 2002. It peaked in January of this year and has been consolidating below the lows ever since. The rally from the real beginning of the uptrend (it chopped sideways for a couple of years before that) has pushed gold up from 272 to 403 currently, an increase of 48%. That’s a pretty spectacular rally isn’t it? Well, maybe not.
If you read yesterday’s post you probably see some similarity between the chart below and the weekly euro chart we discussed yesterday. Actually, the charts are VERY similar. The euro’s rally has been almost identical to gold’s uptrend. If you look at the bottom of the chart below, you will see the ratio of the gold price to that of the euro. Another way of looking at it is that it is the gold price is euros/ounce. Amazingly, the price of gold in euros is almost flat over the last two and a half years. In fact, the gold price today is EXACTLY what it was in Feb’02, just shortly after the rally began.
So how about that? Gold’s big bull market has absolutely nothing to do with gold. It’s all been the devaluation of the U.S. dollar (euro rising). Or maybe the dollar’s collapse has all been because gold has been rallying? Nah!
So as we watch for Gold’s next big move, we’ll need to look out for what is going on with the euro. Even though gold remains in an uptrend right now, if the euro falters right here, as it appears it is, we could see gold follow suit. So you gold bugs out there are really currency traders even if you didn’t realize it. But I bet most of you did.
Right now key support for gold is at the 20 and 40-day MAs, both at about 400. A close below there is negative, and a close below 390 is outright bearish.
Have a blessed day!
TFG
Gold has turned into something of an industrial metal, used in electronics and telecommunications as well as optics and lasers. (Did you know that the 21-inch secondary mirrors on the Keck telescopes at Mauna Kea, Hawaii are coated with pure gold?) As a result, it has lost a bit of its “luster” as a boutique metal. Even still, it the most closely followed metal traded in the world. People still look at it as somewhat of bellwether for economic strength and potential inflation. So I thought we would look at it today.
Gold has been in a large, uptrend since the start of 2002. It peaked in January of this year and has been consolidating below the lows ever since. The rally from the real beginning of the uptrend (it chopped sideways for a couple of years before that) has pushed gold up from 272 to 403 currently, an increase of 48%. That’s a pretty spectacular rally isn’t it? Well, maybe not.
If you read yesterday’s post you probably see some similarity between the chart below and the weekly euro chart we discussed yesterday. Actually, the charts are VERY similar. The euro’s rally has been almost identical to gold’s uptrend. If you look at the bottom of the chart below, you will see the ratio of the gold price to that of the euro. Another way of looking at it is that it is the gold price is euros/ounce. Amazingly, the price of gold in euros is almost flat over the last two and a half years. In fact, the gold price today is EXACTLY what it was in Feb’02, just shortly after the rally began.
So how about that? Gold’s big bull market has absolutely nothing to do with gold. It’s all been the devaluation of the U.S. dollar (euro rising). Or maybe the dollar’s collapse has all been because gold has been rallying? Nah!
So as we watch for Gold’s next big move, we’ll need to look out for what is going on with the euro. Even though gold remains in an uptrend right now, if the euro falters right here, as it appears it is, we could see gold follow suit. So you gold bugs out there are really currency traders even if you didn’t realize it. But I bet most of you did.
Right now key support for gold is at the 20 and 40-day MAs, both at about 400. A close below there is negative, and a close below 390 is outright bearish.
Have a blessed day!
TFG
