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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Zardoz who wrote (13816)	5/14/1999 4:58:00 AM
From: Roebear	Read Replies (1) \| Respond to of 99985

Hutch, 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. Caveats are that both may be merely responding to recent support, such as the 50 dma for XAU or that the shorts have backed off for a bit while loading their guns (gold lease rates are rising) for more shorting. The other and larger caveat to me is the inflation expectations reflected in the interest rates were reflected in the XAU more than in spot. This would be because the XAU is not as easy to manipulate by the powers that be as is spot, simply because there are so many stocks(Edit, I am including the influence of non-XAU stocks on the XAU here, a bigger universe). Kinda like Whack A Mole as opposed to simply putting your foot on the gas or brake. The XAU was then dragging up spot by inducing positive sentiment to the spot market, while the XAU was then responding to the interest rates which were responding to inflation expectations. With the Bank of England sale and inflation expectations annulled by the yesterdays PPI figures, XAU should be tanking to low 60's. The problem is it is not. If it does not, then we are back to the engine that started it all in the first place, inflation expectations. The inflation data lag and are also a tempting area to tweak, if one accepts the manipulation of the spot market anyway. The market, while it can be fooled on the Lincoln principle (you can fool all of the people some of the time...) does NOT lag, it discounts. Back to square one, inflation expectations.... BWDIK, gotta run, Roebear