Thanks for that Toldyah,Toldyah, and Toyah!!
Excellent reply, as you indeed pinpointed two major factors regarding the gold price equation, namely money supply and gold supply.
Recent disturbing factors contributed to this gold rally from $252 to $329 are indeed this two factors.
CB annoucement limited gold sales plus leasing stuff plus IMF is the supply side.
The second one is that money supply which controlled entirely by Alan Greenspan and his company.
It appears lots talks regarding to the first factor which stimulated and catlylize this rally, yet the most crucial is that 2nd factor {BTW, we should add oil price, energy cost raised from $10.50 to recent $25.00, this is cost inflation.]
You know the best measurement of inflation threat is from that DOW JOhn Indusrial Average {DOW}, and that US dollar
index, DXY if there is no inflation at all DOW will move forward and upward, record hi and another record hi, cuz there is no inflatio0n threat, no inflation threat, Alan and his company do not have to raise int rates to brake this inflation threat, if int rates did not go up, DOW will go record hi, and record hi, from 6,000 to 7,000 to 10,000 and to 12,000, or 20,000 We will detect this later.
On the same side of the coin, DXY will go higher and higher.
Now look at the DOW, clicke here:
decisionpoint.com
Dow move up from that 1,000 to this May near 11,000, the up movement slope which is near 45 degree, but since May, 1999 Dow move slope has changeded into 0-5 degree indicating it is flat, and upoward mometum is significantly reduced,, something going on here, that is inflation threat is brewing and DOW detcted this, that is why DOW could not move higher for the last five months from May to September inclusively.
More interestingly, DOW not only lost it mometurm and it reversed especially this few days, see the chart, Dow decisively broke that 10,600 which is the parallel line, and last few days decisively broke that 10,400 and still could move back up to that 10,400. It indicates that inflation is coming and coming big. or else Dow should be 11,000 or 12,000 by now. That is why CB annoucement is just a catlyst, help this fast and big move of gold big rally,and changed market sentiment. Supply concerns and inflation concerns.
Dow first enemy is inflation and int rates. Gold best friend is inflation and demand over supply.
Now DXY
decisionpoint.com
Since Rubin resinged on JUly 1,1999 DXY stayted at 105, as soon as Summers took over his old post Treasury secreatary, DXY got tanked. [Maybe Summers could not hold Rubin's old policy--strong US dollar policy, or he could not fit Rubin's shoes...etc.}
For the last three months DXY traded in a rectangular trading ranges between 99 to 101.50, these few days DXY decisively brokeout that suppot line of 99 and keeps going down today DXY hit new low 97.46 etc,..... why?? WHY>???? inflation is brewing and it is big......
Now if history will repeat itself, the chance of this 1999, Octor 19, looks like a good candiate for DOW to crash -600 points a day make DOW to that 9,400 which is the technical measurement of DOW last breakout.
If that is the case gold for sure will be $417.50 and Silver $7.50 by the end of this October.
Watch the tape closely, Folks, something big is coming in these two weeks. And I am not kidding at all.
JOhn Paquet |
