Gold has traded in a choppy lateral motion recently, with prices sliding south over the past week or so. The market looks hesitant ahead of the FOMC meeting this week, with traders cautious not to take on too much prior to what could be a game changing announcement.
Given that gold has hit our target of $1800 we feel it is appropriate to review our outlook on the gold market, the state of key factors that influence gold prices and possible trading strategies going
Gold prices made yet more all time highs in the last trading session, propelled by what we think was a short squeeze.
In 1924 John Maynard Keynes referred to the gold standard as a “barbarous relic”, but we think the new barbarous relic is using gold stocks as a trading or investment vehicle in an attempt to benefit from rising gold prices.
Recently gold challenged it’s all time highs, being propelled largely by renewed concerns over the Greek debt crisis and the possible ramifications a default could have on global financial markets.
This essay will attempt to address the question of whether or not silver prices are in a bubble, or possibly may be turning into a bubble and if so what trading strategies may be suited to the situation. This article will hopefully provide another string to the readers bow in attempting to identify bubbles and being able to protect one’s portfolio and even potentially profit from them. For the record we feel it is prudent to state our view upfront, we do not think silver is in a bubble at this point in time. However we think that it is likely that it will become a bubble in the future, but we cannot say when or at what price.
During the first nine years of this gold bull market, gold prices moved with a near perfect inverse relationship to the US dollar. Indeed, in the early years gold was only really moving up against the greenback, it was only after a few years that it began to appreciate against all currencies. The game plan was simple; the dollar is going down, so gold in USD terms is going up with some leverage factor. Gold worked well as both a USD hedge and as a tool to speculate on a USD decline. This is no longer the case.
The ability to produce successful results and successful rhetoric are two very sought after and useful skills, but despite their stark differences the two are often confused
Gold investors tend to focus overwhelmingly on the relationship between the US dollar and gold, citing that a lower dollar leads to higher gold prices in US dollars. Whilst this may be generally true, there is another relationship that does not get as much attention as we believe it deserves, and that is the relationship … Continue reading “The Key Relationship between US Real Rates and Gold Prices”
Gold prices embarked on a massive rally recently, rising from around $1210 to $1380 in just two months. Simultaneously the US index, which has a traditional inverse relationship with gold, has fallen from 83.5 to 76.5 as America puts a nose ahead in the current currency devaluation wars. The fundamental factor that is driving both … Continue reading “Never Mind What The Fed Thinks, The Markets Have Decided QE2 is Coming”