GOLD CAN RISE ALONG WITH THE DOLLAR

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.

xau

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.

79 thoughts on “GOLD CAN RISE ALONG WITH THE DOLLAR”

    1. gary Post author

      Hard to say. Gold still hasn’t formed it’s DCL yet but it should be getting close. The cycle is on day 30.

    2. AlexP

      DCH in SP500 = today @ 2077.79, day 18.
      expected DCL = ~1965 on or immediately after Employment Situation on Nov 7.
      Exhaustion gap-up today will be filled on Monday with a breakout gap-down.

  3. Stefan

    Gary wrote:
    “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”

    Yes, or it was a natural correction after 11years up!?

    1. gary Post author

      Not a chance. Just a little common sense can dispel that myth. With every central bank in the world printing trillions of dollars the only way for some of that not to land on the metals is because it was forced artificially lower by the countless huge attacks in the middle of the night.

  4. AlexP

    sold it all on strength, 100% cash – in strong USD 🙂

    Stocks have opened on an EXHAUSTION GAP-UP, as expected, and have come into their DCH un strong, triumphant upthrusts, also as expected and posted here last week.

    From now on, I EXPECT SP500 TO RETRACE TO AT LEAST 1965 DURING THE DECLINE TO FOLLOW INTO THE FIRST HALF OF NOVEMBER!

    Good luck to you all!

    1. gary Post author

      The daily cycle low isn’t due until mid November. I wouldn’t look for a top yet. The NDX has to at least test the all time highs before we get a pullback into the DCL next month.

      1. AlexP

        sorry, Gary, I think it is a 90% probability that today to be the DCH day and I give 9% to Monday.
        this has been an exhaustion gap today at the opening; it could not have been a common or a breakaway gap.

        despite our soft disagreement on this DCH, the really important thing for both of us, I think, is: we are on day 18 for stocks; until mid November there are another 15; we already have a right-translated cycle in stocks 🙂 that’s the important thing

        1. ted

          Hi Alex,

          Are you serious? You can’t see today as a breakaway gap? Really? Please look a little more.

    1. AlexP

      Thank you, Paul!
      An unsolicited advice: please stay out of leveraged products and out of FX and commodities in general, unless you have the stomach for a system that requires a high reward-risk ratio and low reliability (i.e. smaller wins in total trades –> one can make a fortune even with a 30% reliability as long as he operates with a RR ratio of at least 4:1).

      Be patient and don’t get greedy: choose a system that works with softer parameters (larger reliability and lower RR ratio) and that would be trading stocks in a cash account.
      Good luck!

  6. Trond

    Seems Dollar is indeed on way to its DCH, just broke out of its multi-week sideways trading range’s double top. Euro sinking like lead.
    Oftentimes when the dollar starts to rallying and gold is also strong i remember that people always say, ‘this is a good sign, gold is showing relative strength’. But then usually after 1 o 2 days of insane $, gold can’t take no more and suddenly cracks, just like just now this morning. (The few times, in 2009 and 2010 this doesn’t happen are exeptions.)
    if 97.10 then $ breaks out of the 7 month’s consolidation…

  7. gary Post author

    Oil is getting close to the conditions neccessary for a cycle bottom. It’s on the verge of completing a Bollinger band crash signal today. Once oil bottoms gold should to.

      2. David

        So, you’ve advised folks to BUY at these prices because a new bull is on it’s way but YOU THINK this DCL won’t could end at 1040!!! That’s 11% below Friday’s closing price.

        What type of crazy stuff is this?!?!

  9. Don

    Gold is no longer being manipulated. Great. But, look how fast the the US stock market is going up! Manipulation! Then there is the sling shot move up in the US dollar. More manipulation! Will it never end?

  11. bill

    I’m sure many people bailed out this morning, Bull markets like to take as few people as they can for the ride…

  12. Frank

    Gary,

    Regarding USD, I have the impression, weekly chart looks very bullish (no expert however) as MACD almost crossed.

    Maybe another $ rally is needed before $ corrects as there are still too many USD bears.

  13. tulip

    Dec Rate Hike Looms: Despite Job Cuts, Survey Collapses, US Manufacturing PMI Surges To May Highs
    Tyler Durden’s pictureSubmitted by Tyler Durden on 10/23/2015 09:52 -0400

    Markit

    inShare
    2

    Having stabilized at 2-year lows in September, October’s preliminary US Manufacturing PMI printed 54.0 (smashing expectations of a small drop to 52.7). Despite collapse regional Fed surveys, and widespread job cuts across the manufacturing sector, Markit claims US Manufacturing is the strongest since May. Both output and new orders surged as input costs fell, as Markit notes, despite cycle high inventory levels, today’s data “indicated a robust and accelerated expansion of production levels across the manufacturing sector.” December rate-hike odds are risisng…

    October data indicated a robust and accelerated expansion of production levels across the manufacturing sector. The latest rise in output was the fastest since March, which brought the pace of expansion back in line with the post-crisis average. Survey respondents mainly cited improving demand from domestic markets and competitive pricing strategies. At the same time, global economic uncertainty and lower energy sector capex were reportedly factors acting as a brake on manufacturing growth in October.

    Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said:

    “October’s flash PMI survey brought welcome signs of stronger manufacturing growth at the start of the fourth quarter.

    “The positive start to the fourth quarter suggests the economy may be picking up speed again after slowing in the third quarter, for which the PMI surveys pointed to annualised GDP growth of 2.2%.”

    “Production growth rebounded in October to the fastest since March, in line with its post-recession average, as order book growth revived amid improved demand from both home and abroad.

    “However, worries about the dollar’s strength, export weakness and the recent downturn in the energy sector mean that business optimism and employment gains remain weaker than seen earlier in the year.”
    Well with great data like this and markets exuberant – theres going to be plenty more strong dollar to worry about soon.
    ZERO HEDGE 10/23/15
    Charts: Bloomberg

    1. tulip

      Bill,
      zero hedge has another take on the bb article..re the Yuan in the SDR..
      IMF trying to stem outflows in yuan in China..

  15. Trond

    Such a ‘punch down ‘about-face reversal in gold is usually not a good sign for the near future. (But there are exeptions, if it can hold inside its current multi-hour corridor..). Euro breakdown target 1,06. Means that $ may start its next leg up after 7 months consolidation. Usd trying now to break clear of its 7 months down trendline,

  16. Trond

    Most likely $ will turn back now and retest the top of the multi-week sideways range it just broke out from. Then gold may put in a DCL here soon.

  17. ted

    For those of you that believe today is an exhaustion gap, and the market is turning bearish, should call your local psycho-therapist and have your head examined for cognitive dissonance.

    Today is a break away gap and up up away we go to parabolia. Why is this only obvious to me?

      1. AlexP

        🙂 thank you, Bill!
        One could short it quite profitably, Bill. But only if that is part of one’s trading system and one does it by respecting one’s position sizing and risk management rules.
        For me, on the other hand, it isn’t part of my trading system …but that’s just me 🙂

    3. tom

      I’m not claiming that you’re wrong, but maybe it’s neither breakaway nor exhaustion gap. It’s just a gap higher- it doesn’t have to be either one. And those guys that said that they’re selling their longs into strength – since when is that a bad idea?

  21. Kosta C

    I would have to agree with AlexP on his assessment. Just purchased HVU (Volatility Bull+) as this is a back test on a very long trend line breakout. Trend line following Oct2011 low, Oct2012 low, Oct2014 low, and now touching from the underside (backtest) on the Oct2015 high.

    1. AlexP

      yeap, it looks like a really good trade. Maximum target price = 70, i.e. just below the pivot reached some 3w ago, to be reached arround Nov7 on Employment Sit.

  22. Super Mario

    Commodities like oil and silver are not really moving because the real economy is collapsing. Central banks just want the fraudulent stock markets screaming higher.

  23. ted

    I have *never* seen a market more *bullish* than this one. And most of you are going to miss it. Amazing.

  25. mike trike

    COT just out. Very bearish for gold and slightly more bearish for silver than last week. Time to buy some puts before the market closes.

  26. bill

    Gold and miners catching a nice bid here, next week will be interesting, the current GOLD flag is still very much in play. I am short SPY for the record have a nice weekend.

  27. William

    GDX is gonna close with a weekly hammer right at its horizontal resistance…am getting out of miners’ long here now!

      1. David Silver

        Nah no way Jose, she’s oversold and the money will flow into her Monday with thanks to today’s market and the MM’s working their magic for me.

    3. David Silver

      I think we go down just a tad then flatline Monday for a couple days into the FOMC then head higher.

  35. gary Post author

    Why do people find it so hard to ride a trend? It’s pretty obvious the Fed has gotten control of the stock market again. Probably more QE has already begun. Yet traders still want to fight the Fed’s printing press like they think we actually have free markets. Still trying to pick tops instead of just letting the Fed make them money.

    2. David

      If the FED has control of the stock market again, won’t they also have control of Gold. They’ve been driving it lower for years, why have they decided to change gear now?

  36. Trond

    Well, long as it’s not the Screaming Orphan Getting Eaten by a Wolf -candle there’s still hope 🙂
    On the seasonal charts volatility statistically skyrockets from mid-October till the end of month. The 1987 crash happened on the 19th and ‘1929’ on the 29th, so long volatility could be a god bet.
    Silver has a bearish short term h-s formation, maybe PM’s will bottom beginning or middle of the coming week, unless they don’t get tumbled down by a scary stockmarket dip of course… (If avoiding that, then metals and miners are generally strong from the end of October, especially in the second half of a pre-election year).

  39. ted glum

    Don’t ignore the trend which has been repeated for the last four years a rising dollar=falling gold prices. There is nothing to suggest it would be any different this time, other than trying to save face after incorrect predictions/fortune telling.

  41. Marco

    Am I wrong or very FEW people would believe that Gold could go up alongside with the dollar and the stock market???
    Am I wrong saying that IF this would happen the best sector would be the devastated precious metals stocks world?

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