Damir Tokic's  Instablog

Damir Tokic
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Dr. Damir Tokic is owner of Macrotheme Capital Management LLC, a Commodity Trading Advisor. He is also a professor of finance at ESC Rennes.
My company:
Macrotheme Capital Management LLC
  • Gold bubble burst? Not a chance. 0 comments
    Oct 19, 2010 2:39 PM | about stocks: GLD, SPY, FXE

    December gold futures are down at the moment about 40 USD. Is this a gold bubble burst? Not a chance, trend followers are taking profits, and that's it. The Euro is selling off, and the stock market is off by almost 2% at the moment. Trend followers taking profits on all fronts. 

    However, as long as one major currency is in crisis, the gold will continue its' rally. So if we are about to hear some bad news from the EU, that's only going to push the Gold higher, even in the face of rising USD. Further, if the stock market crashes, the money will flow to to safety of gold once again. You can't go to Treasuries at these rates.  

    Thus, at this moment, the positive correlation between the Euro, gold, and the stock market continues during this correction. But I don't expect the a deeper correction in the stock market and the Euro will cause the deeper correction or possible trend reversal in gold. Fundamentally, there is no light at the end of the tunnel for the gold rally.   

    Disclosure: No positions

    Stocks: GLD, SPY, FXE
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