The Amazing Dollar-Gold Relationship

Both the dollar and gold moved down Friday and that makes an amazing 13 out of the last 15 days that they have moved in the same direction (based on [GLD] and [UUP], as first mentioned here last week). As shown below, going back almost two years, nothing comes close to this development as these two normally move in opposite directions.
Lest you think that this is just both of them zooming higher together, of the 13 days that the two moved in the same direction, there were seven gains and six losses.

This may be a fundamental change in the relationship between these two.

Full Disclosure: Long GLD, no position in UUP

Comments

[Roger Knights:]

PS: Therefore, European flight capital is moving to both the dollar and gold, putting them more or less in sync.

Feb 15 08:20 AM

[yellowhoard:]

I agree Roger. I think that the dollar and gold are being bought side by side with each hedging the other. If I were managing hundreds of billions of euros or rubles and I had to hide somewhere, I sure as hell wouldn't park it all in US dollars without taking out an insurance policy in gold.

Feb 15 10:02 AM

[Conan the B...:]

Yellow: By your reasoning, if Gold drops so does the USD.

Also, All of the Gold "ever" mined is valued around $4 Trillion. This is New money chasing gold and it is not confined to USD Debt purchases.

As a hedge against the USD's drop with all of the Billions auctioned off last week, Gold should have spiked above $1,000. It should do so next week at the latest when the Stimulus Package is passed into Law just at the prospect of the Trillion to be spent.

Do you know the Definition of a line? How would you go about Monetizing a line?

Feb 15 12:57 PM

[yellowhoard:]

Possibly yes. If the Europeans suddenly decided tomorrow that everything was peachy, they might sell dollars and gold and reinvest in European markets. This would lower the dollar and gold.


On Feb 15 12:57 PM paultaut wrote:

> Yellow: By your reasoning, if Gold drops so does the USD.
>
> Also, All of the Gold "ever" mined is valued around $4 Trillion.
> This is New money chasing gold and it is not confined to USD Debt
> purchases.
>
> As a hedge against the USD's drop with all of the Billions auctioned
> off last week, Gold should have spiked above $1,000. It should do
> so next week at the latest when the Stimulus Package is passed into
> Law just at the prospect of the Trillion to be spent.
>
> Do you know the Definition of a line? How would you go about Monetizing
> a line?

Feb 15 01:16 PM

[roy piper:]

Well duh!

All gold prices are is a reflection of the value of one's currency. That is just "Gold Knowledge 101."

Feb 15 01:35 PM

[Matthew Car...:]

What really is happening is that everything is depreciating relative to gold, including currencies, equities and commodities.

Feb 15 01:48 PM

[silverwood:]

Maybe it the perception managers showing us the $US is a good as Gold....AHHAHAHAHA!

Seriously, it has to do with the safehaven play. When fear is increasing, gold and $US are being accumulated, and when hope resumes they are moving back into other asset classes, or something to that effect.

Feb 15 02:04 PM

[yellowhoard:]

Do you know the definition of a line?

Too cryptic for me bro.


On Feb 15 12:57 PM paultaut wrote:

> Yellow: By your reasoning, if Gold drops so does the USD.
>
> Also, All of the Gold "ever" mined is valued around $4 Trillion.
> This is New money chasing gold and it is not confined to USD Debt
> purchases.
>
> As a hedge against the USD's drop with all of the Billions auctioned
> off last week, Gold should have spiked above $1,000. It should do
> so next week at the latest when the Stimulus Package is passed into
> Law just at the prospect of the Trillion to be spent.
>
> Do you know the Definition of a line? How would you go about Monetizing
> a line?

Feb 15 03:59 PM

[Dave Wrixon:]

Well, if Gold is coupled to the dollar, the only way is down.

The differential between Brent and West Texas tells me that the US economy has all bar shut down.

At those prices the US will soon be a net exporter of crude. Hell, we can't get it at that price in Central Asia.

Feb 15 05:47 PM

[ROLEX18:]

When Big Money want to dump Gold this is exactly what they will do, showing you how GC is great that even rising US$ can not break it.
The small fry enters en masse, suddenly in the blink of an eye you witness unprecedented move down in Gold that you don't even have a time to react, in the beginning you get greedy buy more, then you are panicked and shocked, then you are taken out on a margin call, then you realize Gold price was like Disney Cartoon it's too late, Gold is 500$ and it is not a bottom yet.
Smart money cover with huge mega profits, and move to other trading pit.

Feb 16 11:57 AM

[silver-bullet:]

Folks,

Peter Schiff is telling the Saudis to put their wealth in gold:

www.youtube.com/watch?...

.... and they are very receptive.

Feb 16 01:30 PM

[silver-bullet:]

Here's another clip on Peter advising the Saudis:

www.youtube.com/watch?...

Feb 16 01:35 PM

[silver-bullet:]

And here's another:

www.youtube.com/watch?...

Feb 16 01:41 PM

[phdinsuntan...:]

Peter is to the Saudis
as Blackrock was to China

Feb 16 02:14 PM

[Mayascribe:]

Thanks Silver Bullet!

Just look at what Nova Gold has done since January 25th: up over 90%. Since December 5th, Jaguar Mining is up 125%.

I don't mean to be glib, or unscientific, but: Basically, since November, you could shape all gold (producing) mining stocks into the likeness of a paper donkey and attach it to a wall. Then, blindfold yourself, turn around three times, walk up to the donkey and "pin the tail" on the donkey anywhere, and likely that stock will be up somewhere between 80 to 150 percent since November 19th. What other sector of stocks can claim this upward momentum? The rush to gold has already happened and I believe it will intensify dramatically, especially moreso if the Saudis or China decide to stick it to the world in these dire times.

Feb 16 02:39 PM

[auto44:]

I believe that you really need to know volume to make sense of a chart, weather it is gold stocks or what ever.

Feb 16 03:01 PM

[Mayascribe:]

Though, Silver Bullet, after mulling over Schiff's U-Tubes, I wonder what would have happened if Sen. MacCarthy or Hoover were (reincarnated) to be in charge and they learned that Schiff is over in Saudia Arabia spreading advice and wisdom of how to take over the world gold market. Would this not then be tantamount to treason?

Or, to bifurcate into another way of thinking, could Schiff be a potential American hero/guru; if the Saudis corner the market, and gold goes to $5000, $10,000 an ounce, then the American reserves would be worth 5 times plus or even 10 times plus its current value?

To me all this lands somewhere between hilarious, sketchy, far-fetched, and also, potentially downright scary.

Feb 16 03:29 PM

[thesnowjob:]

I know you keep saying $500 gold. What you described has already happened, already washed out all the longs. You know the open interest was reduced dramatically. Open interest has a long way to go to reach former highs last March.

I'm curious why you keep calling for $500 gold. Can you give insights?

Thanks


On Feb 16 11:57 AM ROLEX18 wrote:

> When Big Money want to dump Gold this is exactly what they will do,
> showing you how GC is great that even rising US$ can not break it.

>
> The small fry enters en masse, suddenly in the blink of an eye you
> witness unprecedented move down in Gold that you don't even have
> a time to react, in the beginning you get greedy buy more, then you
> are panicked and shocked, then you are taken out on a margin call,
> then you realize Gold price was like Disney Cartoon it's too late,
> Gold is 500$ and it is not a bottom yet.
> Smart money cover with huge mega profits, and move to other trading
> pit.

Feb 16 08:45 PM

[Roger Knights:]

The euro continues under pressure today (Monday evening), with the dollar rising sharply against it. Meanwhile gold has also risen sharply, by almost $9, to 951 (despite oil's falling by $1.81). So my theory about European flight capital is bolstered. It's also bolstered by this report on the Euro's fall to a ten-week low, in Bloomberg:
www.bloomberg.com/apps...

Feb 16 11:34 PM

[TERN:]

Hi Mayascribe,

I saw these videos with interest too. There is indeed a gleeful anti-patriotic disconnect between Mr Schiff and the United States' plight. Of course he is positioned to benefit from a dollar collapse and so are his clients. But perhaps there is still more to it.... is he somebody's salesman?

Boosting the value of US gold reserves (if they still exist) by destroying the financial position of the USG and the value of the dollar ("don't lend to them, they'll just waste it") seems a bit of an odd strategy.

Why would Saudi Arabia not simply declare its Riyal an oil-backed currency?


On Feb 16 03:29 PM Mayascribe wrote:

> Though, Silver Bullet, after mulling over Schiff's U-Tubes, I wonder
> what would have happened if Sen. MacCarthy or Hoover were (reincarnated)
> to be in charge and they learned that Schiff is over in Saudia Arabia
> spreading advice and wisdom of how to take over the world gold market.
> Would this not then be tantamount to treason?
>
> Or, to bifurcate into another way of thinking, could Schiff be a
> potential American hero/guru; if the Saudis corner the market, and
> gold goes to $5000, $10,000 an ounce, then the American reserves
> would be worth 5 times plus or even 10 times plus its current value?
>
>
> To me all this lands somewhere between hilarious, sketchy, far-fetched,
> and also, potentially downright scary.
>

Feb 16 11:54 PM