Tuesday, March 17, 2015

Did [GLD] just bottom?

Looks like a dramatic AM reversal after clearing out all the stops on overnight positions.

I was looking for something like this in conjunction with some kind of news to mark the peak of this dollar run.  I think that news comes today in the form of the growing loss of confidence in the leadership of the US in global financial matters as reported on by Mish (and many others).   The formation of a Chinese-led world bank again increases the odds that China will eventually float the Yuan as a gold backed currency.

Lately I have been reminding people what drives the true purchasing power of a currency.  If the currency is real money like gold then it has to do with how much new gold is being mined processed each year relative to the production of goods in the economy (which itself is essentially a proxy for population growth since nobody will produce things if nobody is there to consume them...).  But if the currency is fake, faith based fiat crap like all paper money is then it has to do with faith in the issuer.

When it comes to economic conservatism, China is a two headed beast.  One one hand it has taken on massive debt in order to increase its housing stock.  That is not conservative but rather liberal in the extreme.  At the same time, China is basically the manufacturer for the world and that is a very conservative title to hold under my definition that true conservatism is a bent toward production over consumption.

In any case, we have a valid 5 wave move down and so I think the next move for metals and miners will be a dramatic 5 wave move to ~ $1400 in gold.  Minimum price target for JNUG from here is $70.  Current price of JNUG as I click Save is $15.65.

No comments:

Twitter Delicious Facebook Digg Stumbleupon Favorites More