• 518 days Will The ECB Continue To Hike Rates?
  • 519 days Forbes: Aramco Remains Largest Company In The Middle East
  • 520 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 920 days Could Crypto Overtake Traditional Investment?
  • 925 days Americans Still Quitting Jobs At Record Pace
  • 927 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 930 days Is The Dollar Too Strong?
  • 930 days Big Tech Disappoints Investors on Earnings Calls
  • 931 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 933 days China Is Quietly Trying To Distance Itself From Russia
  • 933 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 937 days Crypto Investors Won Big In 2021
  • 937 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 938 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 940 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 941 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 944 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 945 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 945 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 947 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

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