There seems to be a big misconception that gold can’t rally along with the US dollar. Nothing could be further from the truth. Just because the ECB is currently winning the currency war and weakening the euro against the dollar doesn’t mean that the dollar is gaining in purchasing power, or that the supply of dollars is shrinking.
Folks I’ll say this again; there is one reason and one reason only for why gold has been in a bear market. It’s because the bullion banks created it in the attempt to push price as low as possible before the next phase of the gold bull market begins. The simple fact is that the bigger a bear market is, the bigger the bull will be that follows it.
The banks managed to drive the XAU all the way back to the 2002 lows. They did this with gold still holding well above $1000.
They managed to create one of the most destructive bear markets in history and did so despite the fundamentals being the most bullish in the last 15 years. This has created a condition where the mining stocks are so grossly undervalued that the upside potential is absolutely mind boggling. All we need is for the manipulation to stop and the banks to convert over to the long side.
Wihout a doubt this has been the plan all along, and now that they have forced the sector down to the 2002 lows I think we can assume they have “accomplished their goal” and will now get out of the way and let the natural fundamental direction and supply and demand take the market higher.
Yesterday and today are a perfect example. If there was ever a time for the powers that be to smash the metals it was yesterday and this morning as the dollar is rallying hard. Yet there was no premarket attack on gold either yesterday or today.
So I’m going to suggest that the attacks are probably finished and gold will now resume it’s natural upward trend pushed by the fundamental driver of every central bank in the world printing trillions of currency units.