I give you this as you say:
"I agree that it is a weak drag up for spot, there are a few differences from the behavior of spot to xau recently as opposed to the last several years. One is that the XAU is preceding spot more than usual in rallys. Two is that the XAU is lagging spot more on declines. Three is that, as I mentioned, spot should have been heading for new lows after the technical damage of the last week."
But consider this:
I think the crash of 1987 painted the history for GOLD.
During that time Gold moved squat.
The XAU moved a lot:
chart.yahoo.com
At that time inflation was higher, and many on the street where in denial. Inflation {Not CPI inflation, but true inflation} is a lot higher then many suspect now. This would suggest that the XAU is vulnerable for LARGE drops, unless gold climbs. XAU is very rate sensitive. But INFLATION does not drive gold higher, it's deflationary pressures such as rising FED rates that has the effect on gold. So if inflation is 7.25%, unless the FED rates are raised, NO affect on gold may be noticed. These effects drive through the currencies. XAU was reflecting this POSSIBLE senario, yet if come May 18 {FOMC} the FEDs hold, then the large hedges between the XAU, gold, and currencies will be unwound. And that may push the XAU to Aug lows again. People often buy on trends, and those trends on the XAU may push the Price of Gold up as well. But neither are substainable. If GOLD is a storage of value {with no growth} then currencies are the only analysis of gold that you need to consider. Even supply and demand are secondary.
So just maybe gold is trading at an overvalued level:
Message 9525267 |
