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Key Reports (WSJ):
No reports due out today.

Quotable ( A bit long today…)

"No gold-digging for me… I take diamonds! We may be off the gold standard someday."

                               Mae West

FX Trading – Gold not shining lately…hmmm
Gold bugs call your office!

As gold goes so goes the dollar in the opposite direction?  That is what we’ve been seeing lately.  Today, gold is sharply lower at the moment and trading below its 200-day and 28-day moving averages.  Notice the classic lower highs and lower lows on the chart…

We continue to believe the markdown in growth out of China is key to the future path of gold.  With our agnostic gaze, we view gold primarily as a liquidity-driven risk appetite asset.

Whenever we say that, we are told gold is much more; it’s a safe haven and a substitute for the ugly fiat currencies (we agree paper currencies are very ugly).  But…

How much more stimulus is possible to pump out and cheapen paper currency the world over?  How much closer can we get to all out war in the Middle East?  How much more dangerous can the Pakistan-India on-going quagmire become?  How much have the probabilities increased for social unrest in China and the potential it has to destabilize all kinds of stuff?  We guess things could get much worse, no doubt.  But yikes!  This is nasty stuff on the horizon that we can verbalize and begin see taking shape.  Yet the supposed supreme safe haven–gold–continues to fade on all this stuff. 

Aren’t asset markets supposed to price in these expectations?  Is anyone expecting these areas to improve anytime soon?  Not that we’ve seen.  Gold bugs have gotten exactly what they have wanted and the yellow metal keeps fading. 

So, gold bugs (and that includes you Dad if you are reading) it’s time to call your office!