Aus Bill Bucklers "Privateer" - Gold this Week
Wie üblich exzellente TA und ich hoffe Bill verzeiht mir, wenn ich ausnahmsweise seinen weekly commentary ausborge. Vielleicht regt es einige hier zu einem Abo an!
"This Is Starting To Get Interesting
On a technical basis, we can't do better to sum up the present situation with the $US Gold price than to refer you to the $US 2 x 3 point and figure (P&F) chart. But before you take a look at it, please read our Gold This Week - GTW - for September 16, 2005. That was written as Gold had just broken above the bull market high it had set in December 2004.
Finished? OK. Now take a look at the up to date $US 2 x 3 point and figure Gold chart - up to the December 9 close. The upchannel which we talked about back in September has been broken through, the current $US 527 spot future close has blown Gold right through it.
This breakthrough GUARANTEES that one of two things is now going to happen. Either Gold is going to accelerate upwards and form a new and steeper upchannel. Or Gold is going to correct wherever the present run ends and fall back into the channel. A break of a long-standing channel is a STRONG signal of an imminent increase in momentum. Since this is an upchannel, the momentum is of course UP.
The other point to be made is that when an upchannel is broken above, the TOP of the channel provides a major support point for future downturns. Presently, the top of the channel on the $US 2 x 3 P&F chart stands at about $US 514-16.
That takes care of Gold itself. Now to look at the relationship between Gold and the US Dollar. Again, we refer you to a recent edition of Gold This Week (GTW. This time, it's the piece written on September 23 and titled: "The Last Finger In The Dike".
Finished again? Sorry about all the extra reading, but this is interesting and important stuff. As stated in the piece, we run a daily page showing the ratio between $US Gold and the $US Index. This is derived simply by dividing the spot future $US Gold close by the spot future $US index close and multiplying the result by 100. This week, that ratio finally broke above the high it set back in December 2004 when Gold reached what was then a bull market high of $US 456.00. The December 2004 ratio peak was 563.10.
The reason why the ratio still lagged behind its December 2004 high long after Gold exceeded its December 2004 high is, of course, because the $US index had risen - substantially - in the meantime. In fact, it was only this week, on December 8 to be exact, that the $US Gold/$US index ratio finally broke above its December 2004 highs. By Friday, December 9, the ratio had reached 577.79 - substantially above its December 2004 high of 563.10.
This breakthrough too is HIGHLY significant. It shows that Gold is stronger against the $US now than it was late last year when the $US index was plummeting towards its absolute bottom, a level it had not been below in the fiat currency era - that is - since August 1971.
Right now, the $US index has regained a bit less that 30% of the losses it sustained in 2002-04. Yet the $US Gold/$US Index ratio is now higher than it was at the depths of the $US bear late last year. To give you an idea, if the $US index was still at its 2004 low of 80.60 (instead of its Dec. 9, 2005 close of 91.21), the current $US Gold/$US Index ratio (with Gold at $US 527.00) would be 653.85.
Despite these breakthroughs, it is clear that Gold still climbs a wall of worry as steep as ever. Every day, there are another batch of "analyses" in the financial press which start by trumpeting Gold at "24-year highs" and swiftly go on to state that the reasons for it are "speculative buying" out of Asia and suspected buying by the Central Banks of Russia, South Africa, and Argentina.
Having done that, the never fail to emphasise that there are no signs of "inflation" on the horizon. This, of course, implies two things right off the bat. It implies that the accelerating upmove of the Gold price in ALL global currencies is not itself a "sign of inflation". It further implies that there is nothing behind this Gold price rise - except speculation and some buying from aberrant Central Banks.
For seventy years, since Keynes wrote his treatise in 1936, the financial world has been tenaciously clinging to one foundation above all others. This is the mantra that inflation has nothing to do with money or the amount of same, it is simply and purely rising prices. Expect this mantra to be adhered to right up to the bitter end. To admit that rising prices are merely one of a multitude of EFFECTS of an inflation which is itself solely a MONETARY phenomenon would blow the entire fiat money and credit game sky high.
Inflation is an increase in the stock of money. The defining charactaristic of the past seventy years, and particularly the last 35 years or so since the dawn of the fiat (unconnected to Gold) currency era has been an EXPLOSION of the stock of money. This is so obvious a fact that few are looking at it, and there are multitudes who are moving heaven and earth to prevent them from looking at it.
Late in fiscal 2005, the US Treasury reported that they expected to borrow $US 96 Billion in the first quarter (October - December 2005) of the 2006 fiscal year. On December 8, with three weeks left to go in the first quarter of the 2006 fiscal year, US Treasury debt "to the penny" had increased by $US 198.3 Billion. That's more than double what they "expected" to borrow, and the quarter isn't over yet.
Why has Gold all of a sudden started to accelerate upward? There are a multitude of reasons, but the underlying one is that more and more people have realised that the profligacy of modern debt finance is unsustainable. And more and more of the people who have come to that realisation have decided to PROTECT themselves from the consequences, by buying GOLD (and Silver).
Gold is accelerating because reality is peeking through more and more of the cracks in the facade of the money manipulators. It had to happen sometime, it happens to be happening now. It's as simple as that. How high can it go? There's no way of answering that question. Just keep in mind that on a "constant Dollar basis" (applying the decrease in the purchasing power of the Dollar as measured by the CPI), the equivalent of $US 850 in January 1980 is about $US 2200 today."
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©2005 The Privateer Market Letter
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