Gold is one of the lone green spots on the screen today, as the markets get clobbered across the board. You could cite the latest sovereign debt downgrade, but in reality, this is not exactly breaking news by any means. Any trader with a few working brain cells saw this writing on the wall.
In reality, markets were overbought, and overdue for a correction – so we’ve got some “news” as an excuse for this rollover.
Good news for gold bugs – the yellow metal is holding up very well today.
This is a very encouraging sign for gold investors – the barbaric relic is holding up extremely well today.
As regular readers know, until proven otherwise, I’m a believer in the All The Same Markets scenario postulated by Robert Prechter & Co – that all the financial markets are trading more or less in unison, driven by global liquidity flows. So when money flows, asset prices rise – when liquidity ebbs, asset prices fall.
I thought gold would not be spared if and when the markets turn down again, though I had expected it to fare better than most other assets. Today’s action shows that my thinking on gold may have been too bearish.
The US Dollar, though, is looking extremely strong today – that’s still the place to be in my book if markets roll over. When liquidity ebbs, debts are defaulted on, and the supply of dollars decreases – thus driving up the price of each remaining dollar.
The dollar’s trend is UP!
(Chart courtesy of StockCharts.com)
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