"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 4 hours Meet The Hedge Fund Billionaires Club
  • 5 hours The Next Housing Crisis Could Be Right Around The Corner
  • 6 hours Cartel's, Pirates And Corruption Cost Mexico $1.6 Billion Per Year
  • 7 hours Africa’s Fastest Growing Economy
  • 8 hours The Blockchain Boom Hits The Utilities Sector
  • 10 hours Why Smart Money Is Selling Off Right Before The Bell
  • 12 hours Tech Giants Rally Ahead Of Earnings Reports
  • 1 day Global Debt Hits 225% Of GDP
  • 1 day The World’s First Trillionaire Will Be A Space Miner
  • 1 day How Student Debt Could Cause The Next Real Estate Crisis
  • 1 day This $550 Billion Industry Is Betting On Bitcoin
  • 1 day One Commodity Set To Soar On Russian Sanctions
  • 1 day China’s New Car-Market Rules
  • 2 days Oligarch Risk: The New Red Flag For Investors
  • 2 days Five Things To Consider Before Investing In An IPO
  • 2 days Investors Bullish As Earnings Season Kicks Off
  • 2 days Nearly One-Third Of U.S. Lottery Winners Declare Bankruptcy
  • 2 days Is Facebook Still A Buy?
  • 2 days Will Blockchain Stocks Ever Bounce Back?
  • 2 days Geopolitical Tensions Fail To Boost Gold Prices
Could Tesla Be Profitable By The End Of 2018?

Could Tesla Be Profitable By The End Of 2018?

Tesla has struggled to get…

One Commodity Set To Soar On Russian Sanctions

One Commodity Set To Soar On Russian Sanctions

The recent sanctions on Russia's…

Gold Strengthens in Real Terms

My favorite form of technical analysis is intermarket analysis which is the comparison of various markets and sectors. All markets relate in one way or another. The current market cycle is being dominated by macro-related events. Since all markets have had a stronger link than in the past, it makes intermarket analysis very important. By analyzing markets in the context of one anotherwe can decipher or confirm the cycles within the current secular trends.

Most markets and sectors are digesting recent gains after a very strong run in the past six months. Recently we've pointed out that Bonds have caught a bid. More importantly, Gold is strengthening in real terms for the first time since the start of QE 2. Gold outperforms ahead of inflation and underperforms the Commodities sector during an inflationary phase.

Below we chart Gold against other markets.

$Gold Index
Larger Image

Note that Gold priced in foreign currencies reached a new all-time closing high today. Keep an eye on Gold against the S&P 500. It is not far from reaching a two year high. Meanwhile Gold is strengthening against Oil and Copper.

Why should we care?

Since early 2009, Gold has actually underperformed equities and Commodities. When the economy rebounds, Commodities will outperform Gold. When the economy is stagnant and there is the threat of inflation or deflation, Gold will outperform. Also, as we've written numerous times, the real price of Gold is a leading indicator for the gold shares. The real price of Gold was stagnant over the past nine months and that is why the gold shares haven't performed as well as anticipated.

With equities nearing multi-year resistance and the economy at risk of rolling over, Gold is currently quietly reasserting its strength against all other classes (except Bonds). This is the type of activity that precedes big moves in the metal and in the shares. This is setting the stage for the move out of conventional assets like equities and Bonds and into Gold. For more professional guidance and analysis of Gold and Silver and the leading equities, consider a free 14-day trial to our service.

Good Luck!

 

Back to homepage

Leave a comment

Leave a comment