Archived Gold Notes before 2010

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Archived Gold Notes before 2010

2009.12.31 Finally, gold close above the U$1,000 decisively. There is no if and but. Of course, by quantum effect, we still can see gold price below U$1,000 but would be long. This has been a great year for gold as it shows strong resilience to all kind of pullback and rebounded back. On contrast to the strong financial sector, gold remains advance better than the major index. Financial sector's recovery is more or less artificial. The general index such as TSX, Dow and Wilshire are the one we should pay attention to. Even with the strong rally of the USD Index (a range from 74 to 78 or 5%) did not create a panic (drop by 15%) of gold. If gold talks about inflation, inflation is creeping up.

2009.12.25 Gold bug may have a surprise present from Santa this year. The metals is rebounded and the stocks are stimulated by Goldcorp's acquisition of Canplat along with the recovery of metal. This could make the year that gold close above U$1,000 at year end.

2009.12.19 After a worrisome week of rising USD and falling gold price, it servers a more details look. As scary as it seems, spot gold "fell" from U$1,115.10 last week to U$1,123.80; a gain of 26 bps. Future fell from U$1,119.90 to U$1,111.50; 75 bps. The future swing is high U$1,227.50 to low U$1,1097.40; 11.85%. During this period, the swing of USD is 74.43 to 76.88; 3.29%. Gold loses about 2.5 time more. So there is a panic flavour. Someone gets caught or in panic after gold has a 35% run. We can call this the correction and normal if gold does not fall further. Gold has been hanging around the U$1,100 resistance turned support. We know there is much less faith to break the U$1,227 ceiling so the correction is expected. Could it be further which will violate the U$1,100? The spot gold and USD chart shows gold may be good to stay within the blue shade while USD savours its victory and returns to the red shade after the New Year.

2009.12.11 After a week of joy ride, here comes the down hill. The market either believes the normal business cycle is resumed so flight to safe heaven is not needed or there will be a massive commodities correction due to the whole market correction especially when the DOW Industry and Transport could not confirm. The selling of last week for GLD and SLV are tremendous. The average volume is about 2-3 time the previous up leg. However, this may come to an end after the Fed Treasury auction has complete. The strong selling is just as counter intuitive as the rise of the USD because both are against the trend. Are they correlated? From the OBV it shows dumping is ontowards the down side. It is distribution.

2009.12.04 USD Index surges over 100 bps today that creates disruption in the precious metal market. It was forth told that this could happen even when A$ boost the interest rate to weaken U$. It was also warn that there will be escape hatch to allow the U$ bond/note holders to escape the U$. It was also warn that due to quarter, semi-annual and year end trade payment, U$ will be on demand. This is just another normal day if the down trend of precious metal can be halted. Gold's support is at U$1,100.

2009.11.28 Even with a rallying C$, gold finally hits the all time high C$ close price C$1,264.37. This is also the all time high weekly close for C$ gold C$1,248.26 notwithstanding the all time high close U$ gold price at U$1,175.50.

2009.11.28 First thing first. On Thursday before the panic expels sanity, gold in C$ finally made an all time high. We cannot ignore this landmark effect. Before this day, invest in gold cannot be seen as beneficial as our American neighbour. With this all time high, it confirm the positive advantage of holding gold and so does holding gold stocks. While every entertainyst claims gold is at a unbelievable bull or at a dangerous top, gold price subjects to the Dubai Effect caused gold pulled back from the NYMEX record high of U$1,195 on Thursday to the early Friday morning's low of U$1,130.10; a U$60 spread. At the end of the day it was only a U$13.40 drop. Platinum had similarly action that set the 52 weeks high of U$1,487.90 on Thursday and pulled back to U$1,426.10 on Friday for a spread of U$61. At the end the change was U$34 compare to the pre-Thanks Giving close. Silver's movement is slightly less dramatic. It set its 52 weeks high on Monday at U$18.935 and pulled back to U$17.70 on Friday which is a drop of U$1.20. Severe but not the first time. Dubai Effect is a financial crisis. Precious metal should react favourable but why the pull back. It may be attribute to the paired trade technique used by the fund managers who may not involve in DP World but subject to the U$ carry trade. When the potential to payback huge debt denominated in U$, the U$ surged which will create a negative vacuum on other asset class due to the paired trade. At the same time the margin call will force those rich valued commodities to be dumped. At the end of Friday, the pressure reduced so the commodities recovered. While precious metal stock will move in sympathy with the stock market, because all commodities could be traded in paper form, there is not much difference; margin, leverage, paired trade and no physical delivery. Holding stock has more risk for financial unsound companies but the volatility will be the same. The sharp gold correction after Lehmann Brother's bankruptcy is an example. Gold rose before but fell heavily later. Gold will not be immune from financial crisis. Until the crisis subsides, precious metal's movement could be on negative side. On surface, this could be negative to precious metal but technically, this provides an excellent opportunity to correct precious metals from a super overbought state down to the normal state.

2009.11.23 In last night's USD trading, it remained in the mid 75 range and holding for losing 10 bps. As it passed the midnight, the lost intensified to 50 bps or 0.6% at some point. The downward momentum is gathering. Gold and old response with double the changes; gold 1.3% and oil 2%. Even natural gas goes up 1.6%. The USD index's battle of highland 76 could finish. Now is the battle of 74. With the falling USD, stocks in U$ will be pushed higher to compensate the purchasing power. The domino effect of competitive devaluation will force many world currencies to devaluate. This is actually deflational to those do not devaluation or devaluate slower. With U$ in the process of dethroning, cross border trading profit will be highly unsecure due to foreign exchange or trade restrictions. To ensure profit and avoid any lost, margin and price will be marked up to accommodate the uncertainty. The artificial factor of uncertainty causes inflation. The small inflation of price premium will trigger a vicious circle of inflation spiral that leads to hyperinflation. All these fears have reflected in the world stock markets which are up more than 1% except Nikki.

2009.11.20 By any standard, gold and silver (platinum also) have gone crazy this week. All are at the overbought area of RSI and they do taking a breath now. By examining closer, accumulation may be slow down but not stopped. We are also going to watch any major drop when the COMEX December contract expires on Monday. Most recently, the drop either minor or not happens at all. Judging from last two days strong action of USD Index (up more than 50 basic points), gold can close at record weekly close of U$1,146.80. There is a lost of faith in gold.

2009.11.19 Stock or the metal (not paper)? Stock is leveraged so it goes up and down more than the metal. It also has the additional risk of management and unexpected geology surprises which is also can become a premium for good reserve properties. Many have commented on how gold outperforms the stock. The following chart shows the ratio of gold to HUI (the unhedged gold producer index) for the last 10 years. There are period, gold really out perform the stock but these are spikes. After the spike, the more important trend is declining. From the time when gold was about U$200 in 2000, the ratio is definitely higher than now. During the financial crisis in 2007 and 2008, the ratio did not spike until the beginning of 2009 when there was stamped to exit the gold stock asset class. The current trend of the ratio has a very strong tendency to go down further which means HUI will be advantage.

2009.11.19 The Canadian gold price is only about C$40 from its all time high of C$1,258.76. Can this price be better? The momentum says yes but the important thing is what after. We need to consider two factors that fuel the momentum. The first one is the inflation and the second is the good reason to have gold. Inflation will be surface so this will provide some fuel. Will there be a good reason to hold gold which creates the demand? There is still a chicken and egg issue. If there is hyperinflation than gold is the way to gold because it is believed that gold is the reference currency. For the meantime, gold is not really recognized as the reference currency at the retail investor level so there will be some slow down.

2009.11.13 Speculation is back so metal jumps as well as the stock. USD could remain strong for a short while. Gold's RSI is at 80 so it should have a correction but the action is actually on the sideway to digest the momentum. Silver is more interested than gold. SLV is ain an accumulation mode as we see the OBV is continue to rise. Similarity, gold seems like to have a correction but actually accumulation continues. These accumulation could be at macro level but the trader is very jitter or agile.

2009.11.12 Panic runs across the precious metals market. The actions are different. Metals respond less than stock. While the USD Index jumps 60 basic points or 0.7% gold only responds with -0.8% but HUI is down 3.2% or 14.65. The panic happens 24 hours later. Yesterday, gold has degradation with the spot higher than the future. Tonight, contango returns. USD sinks 0.1% with gold up 0.3%. We could have a rally in gold stock and gold tomorrow even USD remains above 75.

2009.11.11 From mid-night to early morning, USD dips into the 74 region. This time, gold responds the 0.2% dip of USD by a full 1% of change which makes up some lag yesterday. The trading of spot gold showing a very jerky jump for this very U$10. This is a very jitter moment for trader of long and short sides. The future of gold is more reactive by a 1.3% gain of U$14. This again a very need jerk action. Base metals is not quite follow this game of chicken. Once the short is covered, the market could return to a more calm state if USD linger slightly below the 75. However, if USD recovers back to 75, we could see some pressure on gold and old again like yesterday. This seesaw activities will contribute to create a solid base for gold to attack the mid-term target of U$1318 and the oil's U$99 mid-term target. Before anything, there is still a 25% possibility of USD return to high end of 75 near Christmas thanks to the triple jeopardy of quarter, semi-annual and year end financial payment. Updated at the end of day: So much for the base theory, gold pops up another U$11 even when the USD returns to the 75 territory. USD is weak.

2009.11.06 The excitement may be in but it is not sharing by the mass public. Some talks started. Next major break up could be triggered by USD Index fall below 75.

2009.11.03 It is a shocker that IMF sold 200 tonnes of gold from its reserve to India for U$6.7B. The price is U$934.70 which is a discount of U$130 to yesterday and U$150 today's close price. While speculation points to China, India is just another black horse. Actually any BRIC country will do this deal for a more than 10% discount of spot or future price. It is very possible that China, India and some unknown countries from Arabian Peninsula participated in this race and India won. China is in #1 gold producer in the world with access to South Africa's production. It is discernable that China does not have to beat up the gold price. Should American is behind the sale, there will be a good explanation why China does not get it because American still want China to buy billions of T-note. U$6B is not a large number especially there could be special agenda to sell more gold from IMF. Share the love is the way to go so that a platform is built to let China get more gold from IMF without obvious reason.

2009.10.30 Overall, we see the distribution started a bit and suddenly the snow ball rolling becomes avalanche. The OBV started two weeks ago to fall that could be the leading indicator of the precious metal advancement is halted by the bad action of the market and the leaving of safe heaven from the precious metals due to the market negative action. Coming months should be the good months of the precious metals but could be less advantage this year.

2009.10.26 Precious metals rally may take a pause but the accumulation is getting more seriously. This week we also see the defending of U$ seriously. Many times the USD dives below the 75 and just rebounded. These are not non-incidence events. Just look at the market, we see the damage on the long and short side of the U$. The long and short side could be burnt at the same time so both need to sell others to cover. As the result we see gold stock diving.

2009.10.16 Precious metals have their footing firmed up this week. But the risk of return of U$ remains until January. We have seen how the U$ recovers but it remains trending lower.

2009.10.10 Gold's vertical movement demonstrates either panic or short covering but no greed. But it is not shown in the current month's NYMEX gold contract. GLD's movement may not be the most reliable but it does show some sign of short covering with the OBV climbing steeply but now is in selling mode again in a much smaller scale. Silver is a different story. It continues its upward movement with a small sell off before the Canadian Thanks Giving. It should be noted that SLV falls every Friday by 1-3%. But since the low of U$12.27 on July 13, it has gain 43%. Any correction is more than justify. When it comes, it would be at the order of 20-30% which will take it down to U$12-13 again. But weak support could be provided at U$15.75. Judging from the almost 200% average volume of SLV can push the price down by 2%, silver could have more advances. The advance is a combination of devaluation, panic, greed, investment and demand. The demand factor is coming from the industrial use such as wind turbine and nuclear plants.

2009.10.07 It will be in denial if we say gold is not rising. Most of the comments point to the fact that U$ is weakening is the fuel for the rise of gold. If that is the real cause, it should behave like exchange rate; the up and down % of the both side is the same or not too far. At the same time, we could also check the gold price in other currencies. Gold in other currency is rising but at a much slow pace. This morning, the USD Index is down 0.1% and gold up 0.4%. These is a spread of 0.3% different which is way too much. In view of huge gold and gold stock short position, gold's rise is immanent. However, this is short covering. Can we allow overshoot? If it is overshoot, then there will be profit taking for short term investors. Now it is the problem of whether we should take some profit off the table. Before all situation is unveil in hindsight, we do not know will this be the beginning of an up leg. We could only judge from the view of long term trend. This draws the conclusion of short term trade could be very frustration because you can jump off the ship before it leaves the pier by examining the short term trend.

2009.010.04 Marking the U$1,000 as a psychological landmark seems less significant this time. Gold has been in and out of this line frequently. Obviously, it holds up above U$992 looks like the strong support. Gold price stands out different this time at quarterly trade settlement does not weakened meaningfully. The next test will be the year end settlement which is between January and March because of different fiscal years for different countries and companies. The C$ hugging the 200MA has a profound meaning. For a few months, the price of C$ gold has been fallen behind the 200MA. It looked if the C$ has been in such a high demand that it out shines gold's reference currency. The upward trend of the C$ gold price shows the value of C$ has reduced but it is not as much as U$. As the result, the spread of gold price between C$ and U$ has been a downward trend. This trend indicates the deterioration of U$'s value has accelerated rather than gradually. Although there is still a long way to USD Index of 71 but the momentum is apparently staged. There is definitely one major factor to slow down the fall of U$. As the market falls, the demand of U$ rises which pushes it up. The market is not in a health rally at this moment. Should it restores the downward correction, combining with the trade settlement, USD could rise rather than fall. Traditionally, U$ rises from November and peaks at January. Gold price will under pressure.

2009.09.26 The road to Damascus is not a straight road. Investment in gold is not much different from conquering high mountain. There is no path to the top from the very bottom unless it is a small hill not mountain. More, different mountains are different. Gold in U$ has made it to a new peak but not the C$. Investment with currency as a factor is more than a factor of complexity. U$ gold price is about 10% above the 200MA but the C$ gold price is hugging the 200MA. It is not a bad thing for the C$ investors because the 200MA is climbing. Since the gold price is temporarily dominated by the weakness of the U$ not inflation, there is no advantage for the C$ investors in short term. They do not win in this devaluation battle between currency. However, when the inflation kicks in as it always follows all deflation, we can see the C$ investors sing the happy song. One important factors to discuss is the support of gold. GLD and SLV show liquidation. The selling is quite serious. If these are short selling, the rally driven by short covering could be phenomenal.

2009.09.20 Gold, silver, gold ETF and silver ETF are retreated due to profit taking. Silver is too high in the sky it deserves some correction. Gold would be find if not dive below U$992. When gold dives below U$1,000 we can see some dumping due to panic.

2009.09.17 Gold has rallied from the recent low of U$940 level to the current U$1,010 level. This is about 7.5% which by no mean exciting but interesting in the volatile market. If we look back, gold has bounded between U$700 to U$1,000. The current work of gold is being considered as a milestone. Indeed this is an interesting milestone. The more important is that there is no explosion of rally and no major short covering. Comparing to oil, gold is moving gently. Comparing to the rapid movement of silver which has a record high short position, gold is very gentle. If this gentleness could continue, it will be the success factor for gold. Any rapid movement will mean speculation action. The foundation is not steady.

2009.09.12 If gold's rally needs confirmation, we should consider oil and silver. None of them reach a new high. The confirmation may come later. Last time when gold was closed by the day above U$1,000 was U$1,004 on March 18, 2008. Everyone knows what happened about then and later. Bernstein merged with Meryll Lynch. Shortly following that we have the Lehmann Brothers bankruptcy and the Mid-night massacre of the commodities. Gold did not stay above U$1,000. Under the normal situation, it could be continue to rally when U$ getting weak. But what we are facing is, as the conspiracy theorist in action to tell you that, the market is heavily manipulated so anything could be possible. If so, no place is safe. Everywhere is water.

2009.09.10 Whether oil inventory is up or down, the day EIA announces the inventory will push down the WTI. Today is an exception. Is this a sign? Speak of conspiracy theory, there is nothing short to talk about putting a lid on oil and gold prices. Oil has dipped and bounded violently. Gold is popping up and down along with USD Index. Any new theory?

2009.09.09 Gold spot and gold future jump in and out of the U$1,000 region. Barrack dipped 6% because this its n+1 times to "dehedge". With gold poises to write the <$1,000 price into history, all investors worry about who has not come clean. At the same time, The diving of Barrack will no doubt create the margin call. Investment portfolios and funds which short Barrack or hold too much Barrack on margin (aggressive fund) will sell their holding to cover the margin call tomorrow morning. There is a high possibility the gold shares go down further until the early part of the afternoon when the margin clerks stop working. This is speculation and good material for financial mystery. Don't take it too seriously. However we do see some discrepancies on the short term (spot) and December gold as shown below. Gold spot has moved back to a much defensive position while gold future digging its heel above the U$1,000 mark. Gold dipped about 1% today with USD Index lost another 0.3%. So it still a good deal to trade U$ for gold. This kind of orderly transition could be the hallmark of USD Index. China has attempted to talk up the gold price because she encourages people to accumulate gold and silver (at 10, 100 gram chips sold at the banks) starting 3 years ago. As always, Chinese does not announce when they will do but have completed or initiated. Therefore, we can see Chinese to reap the profit. While gold is dancing the jive, swinging left and right and bobbing up and down, silver is monotonic doing the waltz or spiral up. Gold and silver ratio has dropped a hair below 60 today since 70 a month ago. We may see it to improve as much as 50 in short term and 40 in mid-term. When the 2B Watt solar farm is built in Inner Mongolia, China is built in next 10 year, you will need a lot of silver and copper to complete the infrastructure. After First Solar announces the news, copper is recuperated during the day. All looks good until the derivatives blow up.

2009.09.08 After a leaderless Monday, the USD Index has a swan dive of 80 bps this early morning to 77.23. The lowest hit 77.16. As knee jerk reaction, gold rose 1% above U$1,000 to U$1,009.30. Silver is just stronger rose to U$16.74 or 3%. Oil is not driven by the supply/demand anymore but the U$ rose 2% to U$69.48 when all suggest the glut of oil will sink the price further. Copper shares the excitement to U$2.9505 or 2.9%. The only sad story is NG which fell almost 1% to U2.7050. Market is irrational and driven by day speculator.

2009.09.07 Every asset class has its own shining moment. Tech stock in 2000. Energy stock in 2007. It has been advertised that gold is the best investment asset class all time. Consider gold at the price of U$120 in 1978, it is now 8 times of 1978. But if you consider the famous quote of U$850 an oz in 1980, you only make 12% gain today after almost 30 years. This is the number game that the investment advisors love to confuse the retail investors. To invest a lump of money is different from a few thousand dollars. It will be hard to find any thing for a decent return but to preserve the capital for a few billion dollar but it may not be as difficult for a few thousand dollar. Salesmen from the financial industry always make the best pitch for the best scenario. Retail investors need to do homework to see through the fog of war, the war of preserving your own money. If there is a perpetual winning strategy, the working life of financial salesmen should be very short because they should know best. If there is not such thing why these salesmen win all the time. The secret is the commission; especially mutual fund. Once you are in, the commission will continue to siphon from your pocket whether your portfolio is going up or down. Of course, the secret is to switch the asset class at the right moment. It is hard work. You can have 20/20 hindsight to say if you buy Bayer since the beginning of 1900, you can gain 1 million times. If Nortel survives another 10 years, you may say the same thing. Bayer was not the biggest just like IBM was not the biggest during the 1930. If IBM did not have the secret business to help Nazi during the Second World War and capture the German computing industry after the Second World War, or Warren Buffet did not lobby the financing of the collapsing investment banking industry, ....

2009.09.05 Silver is the sun. Gold is the moon. Silver rally 10% while gold 5%. The U$21 target for silver seems more realistic now than last week. SLW's OBV shows a strong accumulation. So does Central Gold Trust. Gold on the other hand does equally interesting. With gold closed above the resistance of U$992 this week, the chance of passing U$1,000 will be high. One should be careful with black hand in the background which may cause another commodities collapse like last year to save U$. For the meantime, some countries ignoring the collaboration effort to achieve a devaluated U$ by doing their competitive devaluation. As the result, the U$ may range bound at current level rather than going down to USD Index of 72 in the 2005. This is a must for the survival of the American align during this weak economy depression. If the American allies let U$ devaluates, it is equivalent to suicide for their current account. Under such condition, Fed cannot let the U$ goes down further by lowering the interest rate and her creditor will also forbidden her from doing so. Therefore, Fed has to let the gold rises and maintains the pseudo zero inflation rate.

2009.09.03 September Gold has crashed the glass ceiling, for today. The interday high is U$993.80 which is above the resistance of U$992. The NYMEX close of the day session is U$992.8. If we use the December gold price which is quoted on NYMEX web site is U$997.70 which is above the U$992. At 5:00, the End of Day price for December is is U$993.40 which is above the U$992. So here we are when USD Index is virtually unchanged standing at 78.40 level but we got a huge rally of gold which threatening to have a shot a the record high of U$1,007. If the gold could close above the U$992 tomorrow, this is a very positive sign to turn the U$992 resistance to become the support.

2009.08.30 Another nail biting week for the gold bug. Gold almost break up but quick respond to the downside of the U$. U$ continues the show that moves to beyond the trading range. It looks like this kind of wide and wild swing will continue until the spring breaks then it will fall. 200MA's falling trend remains unchanged. 200MA is the strong trend. Last time when the 200MA turned up, the strength of U$ last three quarter of a year. Another significant event is the accumulation of the SLV since 2006 even it suffer a big fall. GLD does not enjoy such loyalty. Gold's 200MA is steady but may be too steady. For a new age, gold and U$ should have entered a new relationship we may not be familiar. Judging only by USD Index could very possibly read the tea leave in a coffee cup. We may need to evaluate gold and USD Index separately from now on. There is a chance that gold may remain at the current level when USD Index breaks down. This is based on the fact that US Government need a weak dollar to survive. This will force the USD Index up through political influence. In order to payback all the debt, U$ may not be accepted by the creditors. Gold may have to be paid as part of debt settlement. In a specific period of time, gold could be in excess supply virtually due to the payment without actual in circulation or trading. This creates a pseudo situation of supply more than demand.

2009.08.22 If you hold gold in U$, it sounds exciting but actually goes nowhere. If you hold gold in C$, it is getting worse because of the strong C$. So it is always choices and always perspective. You cannot apply the same rule in all situation. But there is also consideration of short term and long term. Will C$ devaluate along with the U$ or it is getting stronger by its rocks in the ground? If C$ continue to strive, economy will be in a very complicated situation: bad for the manufacturing using local material but good for the natural resources export if they are in price of C$. The reality may be manufacturing will slump and the natural resources does not gain much because the price is in U$. You get the worse of both side. The only positive scenario will be demand really rally. This could happen. Just take a look at the paper industry. It is advancing beyond the demand of American. Think BRIC.

2009.08.14 The precious metal has a volatile but positive week. Silver continues to be the strength that broke the U$15. Gold did not do any thing exciting but in face of the strong USD Index flash rally, it holds up well. These could be a strong sign of a bottom or building a platform/base for precious metal rally.

2009.08.08 The unbelievable become fact. After USD Index hit 77 range for a few days, it toke just one day to go back to 78 and now it is pushing 79. This happens just before the weekend like the break down. Structurally, the USD Index firework is fascinating to watch but the trend has not changed in a major way. The 200MA turns positive slightly. Gold and oil have some casualty but still hanging in. If the price is set by supply and demand while supply and demand could not change overnight why the price change so much? If the price of gold and oil tie to the exchange rate of U$ then the pricing become more complex because we need another reference to calculate the price. While U$ remains the settlement currency and remains the reserve currency, these movement could not be explained other than speculation.

2009.08.05 USD Index dips a bit by end of day today by 4 pennies today but up 7 pennies yesterday after a whopping 200 bps in 3 trading days earlier. This is 2.5%. Gold moves up from U$927 to U$966 today for about U$40, a 4% movement. Is this a corresponding strong reaction? No. Gold has been seen as the lagger and has been dumped due to panic and covered during panic. It remains under the due effect of the Twin Tower which has been towering the situation as major resistance. Each day, the movement of oil and gold have panic reaction by short covering to move up which is not sustainable or reflect the real market direction. Gold stocks seem to have distribution which has not shown any firework yet. Lacking buyer could explain the weak upward bounce. May be there is a base building to support the rally. USD Index could continue to fall, oil continue to rise but gold may keep in trading range for a while. The major movement of gold in U$ is not mirrored in other currencies. If investors believe gold is cheap they would buy earlier. If they believe U$ will fall further but gold is not necessary to be the good investment. So unless there is a clear vision that gold in other currencies will be at high nominal value, gold price will not be support other than American. While the American is crazy on the ETF which is a derivative that does not deliver the ETF is actually disconnected to the physical gold. There has to be a trigger to remove the blockage.

2009.08.04 USD Index has a clear break down but this does not mean things are not reversible. There is always a moment of unexpected low probability. Gold may seem responded strong by bounded back but in fact it has not better than previous double top which is descending. Combine with the higher low, the opportunity of breaking U$1,000 is good. The gold vs USD chart on August 4 shows a synchronized movement of gold going higher but not in a very definitely mode until we have to break the Twin Tower. This raises a frequently asked question: buy before the confirmation or after? Before has higher risk abut higher reward. So the reward is proportional to the risk.

2009.08.03 In the report published by Societe Generale on Official Sector Activity in Gold First Half 2009. Swaziland and Germany are not likely to sell more gold by the second half of the year.

2009.07.31 The god of the market waved the hands. U$ hopped and fell. The process is suspiciously. On its way going to go down approaching 78, it jumped more than 130 bps before it resumes the downfall. The chart above shows how fragile the temporary USD Index rally was. So far gold is really not doing anything. It is still about U$950. But it is moving back the the blue shade. For other currency, such as C$, gold has significantly lower and at a dangerously breaking down level. It is not a comfort moment for Canadian to hold gold now. Silver is no different. This is a new situation. A lot of thinking has to go in to see how this playing out. Anyhow, GLD and SLV show accumulation through OBV. Both OBV are just gone hay wild.

2009.07.25 USD Index is fighting to keep above the 78 level. This drives the precious metal to a trading range. The commodity market is abnormally sensitive to the movement of the USD especially to the upside. Panic may be shown in a few moments which demonstrated by the violently negative responses to the small change of the USD. Gold has been in a saturated buying while silver seems extraordinary buying as illustrated by the OBV. While inflation may be going to be a threat to the economy, gold does not have to move up because gold is a reference currency that measures the purchasing power. When currencies perform competitive devaluation, the purchasing power does not change so the gold price does not have to move. We may be observing a very complex relationship among currencies, economy and gold. The formulae may not be as simple as before that one or two factors drive the function. We are going to have a time factor that drives the movement on top of others. If there is stagflation, gold may not play the role of storage of wealth but the reference currency. The result is a stable gold price.

2009.07.18 The tuck of war between U$ and precious metals is carrying on. It seems precious metals win this week but the movement is really ad hoc and all over the place. May be we can take the cue from Dr. Copper who is pressing on the up side. The volume of precious metal shrink is not necessary to reflect demand weaken; it may be just reflect the speculators' view points. Most of the time speculators are wrong. However, speculators shape the short term direction. This is especially true because ETF has not physical delivery. It could go down even the physical demand goes up.

2009.07.12 The highly volatile U$ forces the commodities down. U$ may restore its luster. Speculator is not betting on commodities especially US is going to 'considering action against speculation'.

2009.07.04 After the double demand of U$ for current balance, the real tour de force came before the 4th of July. But gold holds up better than silver which is settled lower. All eyes on the U$.

2009.06.20 Crazy days of the precious metals got a cool shower (not even cold). There are two accumulation pattern in action. The long and short. The short gold is the one between the U$920-U$960. The long one is the upward spiral of U$100 variant. With both gold and silver have achieving higher trough, the upward trend is intact. Of course, all these minor corrections seem controlled by the Plunge Protection Team. Yet it is healthy. Obviously, the PPT uses the USD Index to pull the strings. So by watching the 200MA turning up (which is actually down) in the chart above, it spells trouble. Gold future at NYMEX has gone from the gigantic volume of 67,920 on May 28 to yesterday's 73. It is either no one willing to buy or no one willing to sell at U$935.40. The future still has U$2.00 premium over spot. If the PPT does not pull out another trick from the sleeve, it is near or at the bottom.

2009.06.13 Many surprised by the strong resistance of USD at 78. It is just the matter of supply and demand. If the U$ is falling, business has the the short term need to grasp the lower U$. The demand to secure a lower U$ results the volatility. When USD fell to 71, similar volatility happened. In FX, the change of 10% is huge. So far we have more than 10% since the recent high of 89.17 on Mar 9. Precious metals' strength become the weakness because profit has to be taken to trade the U$. In comparison, spot gold was U$921 on Mar 9 and U$938 on Friday. The detach shown above tells that gold has advanced too much for the to be weaken U$. The base metal has the comeback of 50% and staying strong. It is like gold recovered from the U$680 range to now. Negative news does not scare Dr. Copper. In near term, we can see the confirmation of the inflationary rally by the asset class of precious metals, energy and base metals. Technically, gold and silver may come to the end of the current correction while USD may finish its mini-rally. The 200MA for USD Index is turning to fall. Unless USD rally to 86 and hold there for a while, the 200MA will turn negative. At the same time, the positive trend of spot gold holds, not strong which is the best scenario.

2009.06.06 Precious metals seems lost luster as reported by many entertainyst. Yet if you compare the precious metals with the stock market, this is definitely a very positive week. People expect gold to rally 10% when USD falls from 79.29 last week to the 78.41 on Wednesday. 1% will not make an explosive 10% gold gain. In fact gold is down about 20 dollar by the week means nothing because this is just volatility. The long term trend remains intact. If we examine the ETF GLD and SLV, both have increasing volume from last week. It is more important to get gold and silver down from oversold to sideway to create a base for the rally. If you want confirmation, you can confirm this with platinum which rally from the low of U$763 in October 2008 to the current 1263 (the recent high is U$1,291 interday on June 4). The rally of the U$ and the slight pullback of precious metals is just showing the market is functioning properly. Once the RSI can reach a lower level, the rally will continue. This can be done by sideway action. For U$1,000 price, U$50 volatility is really nothing. Look at Dow, it has the volatility of 200-400 between two successive day, then we know how vicious the battle between the bull and bear is carried on.

2009.05.29 A powerful rally for precious metals and base metals. This wipes out the rumour on the demand for base metals have been destructed. Perhaps this true because wise businessman just wants to lock in the cheap base metal price when inflation is on the horizon. If this is true there must be demand in near future. If not, the cost to hold on them in the warehouse will be tremendous expensive. The strong rally could also triggers the Plunge Protection Team to protect the U$. The U$ rebounds a bit partly due to repatriation of U$ for payback the loan, partly due to profit taking. But U$ will be the propelling fuel for the commodities. One specific note for the NYMEX gold future. The normal daily volume is less than 100 lot. On Thursday, it was about 68,000 and on Friday it was 7,500. Short squeeze could be part of the factor drives up the gold price.

2009.05.21 Action of the precious metals is based on the inverse action of the USD Index. The downward push of USD has been so strong that it dipped below 80 today briefly. If it could not close above 80, it spells devastating state. Today, we gleam a bit of such panic margin covering as the US market slump. This slump is counter intuitive to the inflationary rally to inflationary nature (losing value of the U$ currency). This is a result of the selling to cover the margin call and this will include the precious metals and other commodities. So gold, silver and hydrocarbon cannot catapult to the moon until the USD level which hopefully at 78. If not, the whole all out collapse (in short term) like last year could happen again.

2009.05.18 USD Index collapse is not necessary a continuous trend. The break down below 83 is yet to be proven mid-term. The rapid action create speculation that could drive the reversal which we see a bit of such action last week. Gold reflects this possibility so it does not rocket. Perhaps the most interesting thing for this week is the movement of silver which dropped and rebounded quickly. The ETF are amplifying the effect which could ending detach from the physical metals.

2009.05.10 USD Index has a sudden drop over 100 basic points on Friday. It is a heavy 200 basic points in one week or 2.5% in only 7 days. Gold did not gain 2.5% but moves up slightly. GTU.UN had a new offering with only 7% premium. The unit dropped 20%. On the day of announcement, the volume is 10 time of the daily average volume. This shows a lot of interest on the physical gold when it is offered in reasonable price. Physical gold has a 10-15% premium minimum on anything. People are buying smart and the physical demand is not hysteric. From the psychological perspective, investor is not unaware of the importance of precious metal. Silver is on the way to approach the U$14 and may have a shot at the resistance of U$14.45. Platinum did not make any firework this week but it did the week before. Demand is there, gold price is not up. There must be a reason. As the chart above shown, gold actually is very much ahead of the curve already because it should be at the U$700 level when USD is at the 82 level. It does not like the plunge protection team doing a good job to keep the lid on.

2009.05.06 USD Index continues the downward spiral. It has broken the trend line. It passes the resistance line. At this rate, it may cut through the 200 days MA. This could spell the interlude of the U$ rally. See the chart.

2009.05.04 USD Index breaks down, i.e. moves up in the chart above.

2009.05.02 World economy is not bright, today. Financial continues to rally. Precious metal suffers because there is no visible action on China's gold purchase. Like John Budden says "no big seller will advertise the dumping and no big buyer announces the scooping." The movement will be the result of macro movement. The English scientist discover Brownian Movement describes the result of molecular movement remains the same despite its temporary location. The correction of a bull or bear market is the same. USD Index is on the boarder of violating the slope line. If it becomes realized, the U$ rally may finish. If not we could see the U$ holding high for continuous rally which is bearish to gold. However, this will change one day. Gold is not necessary to be held down. USD has been at much higher level in last 7 years but gold triples the price. Manipulate or not, something could happen. It is matter of time.

2009.04.25 It has been counter-intuitive for many analyst that China has not lost due to her huge $2T FX reserve. According to State Administration of Foreign Exchange (report from China Daily "China Now 5th Largest Gold Holder" the reserve generated U$8.25B (or ~4%) last year. Speculation considers China may start the hoarding since 2003 when the holding was 600 tonnes to the current reported 1054 tonnes. But I think the critical time was when she started to set up the SWF about 2 years ago. In another word, she accumulated about 454 tonnes in two years or about the national production of gold for last two years. Since China does not export gold mined or scrap, the scrap should satisfy the domestic demand (Chinese government encourage people to stock gold by allowing gold deposit accounts). Would China able to buy from other American Friendly Country central banks. If that was the case, perhaps the central banks may stop the selling much earlier. At least the American will stop it because this accelerates the debasement of the U$ as reserve. Should opportunity presents, like IMF selling the gold holding, China could become the 2nd largest gold holding country much faster than anyone expected. There is also the possibility that the concerted gold dumping by central banks may slow down unless American starts to sell her share. This could be proved to be extreme difficult if American lease out gold to keep the price down.

2009.04.24 Both silver and gold enjoy a pretty good week. Gold's come back is convincing. Silver has quick action but support is not firm. The news from ShanghaiDaily.com that 'China adds new glitter to its gold stockpiles' did not stir up a storm. She is buying from the Chinese producers who could not export. More possibly from the other central bank. The reserve may be just 1,000 tonnes (about 1.6% of the U$1.9T FX reserve) according to the official report but it does not identify when. I could be dated and it could be held in different custody that may not be counted as the reserve. China could buy gold without affecting the market price because it is the world's #1 gold producer but does not export. The production rate is 282 tonnes last year. She could increase the holding at a pretty decent rate in the coming years.

2009.04.18 The financial crisis is the most further thing in people's mind. Together with the IMF selling its 300T gold, the precious metals are at downward pressure. Should any trader holding precious metals and financial as paired trade, precious metals have to be sold. The above chart shows gold may face a major correction. In terms of paired trade, gold/U$ pair trade does not make sense any more because their relationship has gone far from linear. USD could move high in July. Should the U$ continue to climb, demand will push U$ even higher. This could cause a short term severe correction of precious metal. This could be realized should the news of IMF selling its gold holding confirmed. However, the motion sponsor is China who wishes to increase the holding of gold in her reserve. The yellow metal may not exit the vault but just changing the label. Should this happen, U$ will drop precipitately while gold shots up. An implication of this could be the repeat of the French demand the American to settle the current account in gold. In this case, the Chinese may ask the American to use the gold reserve to back the Chinese T-Bill bought. This is a form of selling that does not push up RMB and lower U$. The opportunity cost is not the yield of the T-Bill; it is the appreciation of gold. To sweeten the deal, not 100% of the par value of the T-Bill will be backed by gold. Only a portion. This will make the 8,000T gold holding runs a bit longer.

2009.04.10 This commodities market is on an egg shell. Everything responses violently. It is not a present week for the weak stomach. Gold is in a minor correction during a setup for rally. GLD and gold future telling exactly this polarized story. GLD is more geared to market psychology while gold future is closer to the physical. The chart above shows spot gold may finish the correction yet to be proven next Monday.

2009.04.07 This note summarize my reading on why gold/gold share could hedge both inflation and deflation at the both ways. This is based on the assumption that gold is in high demand when the financial turmoil happens. During inflation, the purchasing power of fiat money dwarf quickly. Gold as a reference currency would not be changed. So gold will be in high demand. Gold producer (not explorer) has the asset in the ground so the potential future value will be high. During deflation, the price of merchandizes will keep on going down. Holding fiat money should be no problem. However, deflation could tie to political instability. Thus the fiat money's existence could be in question. As the result gold will be in high demand. In another word, the producer has a higher demand. The value of the gold stock would also increase due to the reduction of cost in a deflation environment. However, a few factors should be taken into account that could impair the shares. During inflation, the cost of production will increase. During deflation, material may not be available because the price could below cost.

2009.04.04 USD Index and the yellow metal look tire of the detach and trying to converge. The IMF selling of gold put downward pressure on gold but it does not help U$ too much. Financial has been regarded as safe ignoring the holding recovery has not been shown. So U$1000 gold may have to wait especially Easter may push the stock market's financial which has nothing improved.

2009.03.28 This has been a precious metal base forming week. Gold has a H&S in near term but a bottom H&S at mid-term. This is reflected by the surge of the USD Index at the end of the week which really surprises everyone. Its rally may be hinged on the recovery of the banking system so US will be the first one getting out of the depression. The psychology boost the USD Index. The strong buy of SLV when it bottomed on March 18 could be sign for strong buying but the buying does not follow through as the silver recovered from the low. Precious metals ETFs have become so popular that its strong bond to the underlying fundamental is loosening because there is no delivery. Trading in these ETFs may be caught by surprise when they see the ETF goes in the opposite direction of the underlying commodity.

2009.03.20 Gold and GLD has different pattern. GLD is a top H&S. Gold future is a bottom H&S. Fundamental says it is going to inflate so gold should go up. GLD is paper gold. This may be the time that real and paper depart. Yet we can interpret the situation is that gold investor will initiate a sell off but the yellow metal's value will appreciate. It should be pointed out that my PF indicator signals GLD, gold future and SLV are all bottom out today. SLV is at a critical level of resistance. Since March 3, there is strong buy on the up side of SLV. Next week will unfold more story. This is a good week for commodities. Will this be the inflexion point? If there is pure fair play, then it could be. Otherwise, it has to be back and forth.

2009.03.19 Gold moves up about 2% and USD Index down 1.5%. At one point USD Index was below 83 or down 2%. Today's Gold USD chart shows USD Index is catching up with gold, i.e. USD Index falling. But gold is rising. The gap is so wide that if it does catch up, gold will be pushed above U$1,100 due to panic. If gold remain at current position, USD Index may have to fall to 72 which will be very scary and create significant inflation in the States. In turn, commodities will be pushed up. So the chance for commodities to stay put is not high. Just looking at Dr. Copper. It is crawling back to U$1.80 a pound. Is there boom time or just inflation?

2009.03.18 Two major events may occur complementing each other today. USD Index drop below the support 86 and challenging 84. A drop more than 250 basic point in just a few hour after Bernie spoke. At the same time, gold reverse the prince from U$880 level to about U$940 level; a swing of U$60. This will scare the gold shorty to death. The latest chart of Gold vs USD Index was as if gold going to break down. With today's action, gold may break through U$1,000 soon. Today's chart. By the way HUI went up 9%.

2009.03.14 The most important chart of this week is the gold vs USD Index chart. Gold bounces at the bottom of the channel while USD break away from the trading range. This signifies the continuation of bullish gold action but we cannot say U$ is weakening. Looking at the spread of U$ and C$ gold price we see U$ is still ahead of other currency. Until USD fall below the 86 support line we may see it as in a trading range. When financial stock rally and gold is not slump it says that there is not much of believe in the financial story.

2009.03.08 The U$1000 is a major resistance for gold but major support for platinum. Gold has been corrected but rebounds before the U$900. It is significant because the rebound occurs when USD Index hit 90 rather than falling. This is the sign of a profit taking rather than top out. Silver meets its resistance at U$13.80. Although it broke through the line but fell back and to retest the resistance. It will be interesting if it holds. USD will have very strong support at 85.60. One special note for silver. SLV has strong selling pressure from the most recent U$14 top but the bleeding stops without strong buy. Could silver top out or silver has some major profit taking because it rose from U$9?

2009.03.01 The U$1000 is currently the resistance line for gold to advance. Platinum passed it and never look back. Gold may need some time because the financial situation has a stable illusion. Gold is not going to be considered as insurance. One significant feature on silver deserves a lot of thinking. The average volume of SLV on the road coming down is very high. This could be a sign of dumping or strong buy. I would bet on the strong buy based on the trend. If it is dumping for exit, it will pass the down resistance at U$12. Otherwise, the price will recover after the weekend.

2009.02.21 Silver continues to perform well although it is not a 100% precious metal. Platinum is breaking through the U$1000 line again and so does gold. When platinum resume the ratio to gold, say in 10 years, it will be outperform gold significantly. This relationship will happen down the road. The history is repeating itself. Last time when gold and platinum ratio hit one, gold took off. So does this time.

2009.02.15 Silver remains the page 16 story (Don Coxe's pet phrase) which does not catch anyone's attention. The bottom was at U$8.50. The next peak is about U$14 to U$15 which could be some resistance. When gold is too expensive, the near gold may be the alternative to catch the bull while it is not too late. Gold is pulled back before the long weekend. One very particular point about U$ should be discussed. Rather than all the prediction on the collapse of the U$, it stands tall. This could be the relative strength of the currency when everyone want to devaluate U$ even Fed. The strength of U$ is a sign that unwinding has not finish. We do not confuse this with the influx of money to America. At this point, it may not be wise decision after China asking American to all the debts she financing. Perhaps you can say American is caught between a rock (need a weak U$) and a hard place (your creditor demand the guarantee of the investment.) The high U$ will definitely help import that kill the inflation but will kill the export which America need most. China will definitely use this opportunity to promote its high price export (e.g. electric car). We cannot have a definity on the collapse of U$ which is no good for anyone. Yet the abyss must continue to grow so the gold could be catapulted to higher position.

2009.02.08 Gold may be on front page but silver is the hero of this week. It pulls back slightly after peekaboo above U$13, the price of 6 month ago before entering the trough. While GLD is doing its breakup Gold Future is either following suite or making the right shoulder bottom. Both are positive for the advance of gold. GLD is especially interesting because it looks like there are quite a bit of short covering. Yet we have to study the AU USD relationship depicts by the chart right above. USD is now forming a bottom on this chart which is a top for the rally when gold continue to move up.

2009.01.31 Gold and silver closed the week at a recent high in U$. Gold is at record high in C$. All this happens when USD is threatening to go to all time high of 89. The scene of 'crime' is contradicting and contrasting. Gold bug will imply gold gets help from inflation. Keynesians' believe the war of deflation is won. I choose one story and follow; it is the gold and silver story. RSI for gold has swung too high and too fast. So it could have a correction.

2009.01.29 Gold continue to rise and defying a strong U$ as show by this chart. Gold up 2.5% and USD up 0.9%. How can this be? We cannot say detach. And I do not want detach. I want the normal scenario, gold up U$ down. Detach could be complicate and has hidden problem. Silver is silently creeping up without getting much of attention.

2009.01.29 Does the demand/supply of ETF reflects the underlying financial instrument? The long and short answer is no. The ETF DS is really the speculation indicator because physical delivery is either not possible (e.g. get some bank equity out by cashing in the ETF is not possible). There is a major differentiator between type of ETF especially in precious metals. Some of them do not hold all the precious metal in bullion. Some of them are in paper. As we know bullion has a higher premium so the price of ETF calls for a higher premium. Central Gold Fund and Central Gold Trust hold the bullion and frequently doing audit to ensure the possession. The next question is whether you can redeem the ETF. Weh we invest, the choice of vehicle has to be very careful and do the due diligence.

2009.01.23 What a joyful day for precious metal. Gold stays above the 200MA. C$ gold price making record high the whole week finished another ever record high. Strong U$ does not damp the return of gold. No news. No change of situation. No explanation.

2009.01.17 John Budden has conspiracy theory regarding the rally of the U$. American would not be polite if the President Elect inaugurated on a day that American stock market and U$ plummet while commodities and foreign currencies rally. WTI oil which is produced on American soil continuously testing the low and the nerve of commodity investors. This is also important because oil is the obvious factor for inflation. Under all these pressure, gold performs beautifully. Checking the USD vs gold chart, the amplitude of gold change is far much smaller than the USD. Detach or not is not a question on what and when but how much.

2009.01.10 In a very adverse strong USD situation, gold and precious metal holding the position right. Three more weeks may have to elapse before any meaningful bull movement. Consider the years of negative publicity on gold that has no yield and low return, in comparison with U$, its performance is far much better. This will stimulate demand. Central Gold Trust has been perform better than GLD. So investors are carefully choosing their investment. Central Gold Trust has announced new issues with 10% premium to the NAV. The price immediately pulled back from 20% premium position to 10% premium but not below that. So it quality is asset is important.

2009.01.04 Gold marked another successful 2008 by finishing it YOY higher. Notwithstanding the gold advance, USD continues to its rally into January despite of virtually zero percent Fed rate. This is the international settlement effect. Two driving forces is breaking down the negative entanglement relationship between gold and U$. It seems in the coming short period, perhaps to the end of January, the divergence remains until they are in reverse entanglement again. This may be advantage of gold. But the really reason could be the Gaza and Ukraine unrest that may be intensified in coming months. Gold tends to gain during these dangerous years. What would be the black swan? It should be a grey one because U$ rally when the economy was broken down. Now we know the story but this grey swan may not disappear. The ratio of Dow to gold is swinging between 10 and 11. When Dow goes up, gold could come down. However, Dow remains in in the trading range pattern in the chart. The breakout may not happen soon. If it happens, we should see the short covering reflected by higher volume. Yet we have to see the definitive buying.

2009.01.02 Not a bad week. Gold finishes higher year over year. Is gold doing what it suppose to do? It is very doubtful because the real inflation is much higher and the gain of gold has not made up the lost. The financial system is in serious trouble and hyperinflation is pressing and squeeze through the first few doors of the house and coming to the bedroom. Yet gold just clear the last high made in 28 years ago. If you frame the timing right, you can see a great investment especially retrospectively. This means asset allocation strategy is important. One should master it.

2008.12.28 Gold has a very clear identity that central banks hate: it reflects inflation, social unrest, financial instability and economic black hole. Silver and platinum are not so lucky. Although they are used in jewellery but usually they are linked to industrial use which is exactly the same situation for gold. Gold has been used in the connectors in electronics as well as the vehicle to deliver medicine. But platinum's association with spark plug is so strong that entertainysts explain the up and down of platinum with the auto industry. Silver's use in photography has diminishing but as antiseptics is rarely known. So what cause the platinum trade at par with gold and then now platinum and gold ratio is at 1.03? The recovery of the economy? Dr. Copper is falling but not bottom yet. What is the story there? While all market entities are heading a single major down trend, what we are looking for is the sign of deceleration of the downfall.

2008.12.27 Gold in C$ made 2 record high on Thursday and Friday. The momentum is also building strong. GLD and GOLD are both hitting the overbought area. Is this the stage for a fall when U$ rally for the current account settlement?

2008.12.20 U$ rebounded because year end coming. Gold is still outperform U$. It should be noted that gold temporary higher than platinum.

2008.12.14 USD has a temporary retreat. This has to be regarded as temporary because international current account settlement continues to use U$. Demand is there. Gold has showing signs of detaching from U$.

2008.12.08 While the commodity market suffered a haemorrhage blow last week yet the contango situation has not change a month. The article 'The End of the Dollar and All Fiat' (courtesy of Seeking Alpha) provides some explanation what is going on.

2008.12.07 As the immediate above chart shows, USD continue to rise but the fall of gold bullion is strongly resisted. Silver continues to suffer as it is believed to be an industrial metal which is not exactly true. When you have an identity crisis, this become a problem. If the industrial metals tank because the future of economy is not good than platinum will show a hint of change. It sank below U$800 and close at U$805 in the spot market. The silver stands about U$9.50 for a long time. The continuous contango in precious and industrial metal in near (i.e. next month) identifies this low price may not be caused by demand.

2008.09.26 Is this the moment gold bug waiting for? Nobody is for sure. Precious metals have been very volatile. Platinum is almost at par with gold, only 25% premium rather than 100%. From 1978 to 1980, platinum declined to a time that is at par with gold and gold exploded to high U$850. Does this mean there is a chance to repeat the history? If so we still have to wait. We are not quite there yet. Gold has been freeing from U$ but not completely. The U$-Gold chart shows the gap widen more but contract. U$ has a good run because of unwinding of U$ short position and the payback of other debt in U$. Things become more and more complicated.

2008.09.23 Commodity bug is a cult, a religion. To debate with them may lead to animated heated debate without touching the real fact. This article from Frank Holmes "Leveraged Hedge Funds are Major Drag on Commodities" (complement of Kitco.com) provides a very objective presentation of bias information. However, you could see the thinking process which is a good mental exercise.

2008.09.21 When U$ rallies, gold falls because of their inverse relationship. From a mathematical perspective, the relationship holds well within a 2% range and getting more inaccurate with a wider range. The mathematical relationship is just a way to measure whether the tie has been in or out. When the relationship is broken that means new factors are in play but the technical analysis does not say what. This is where the fundamental comes in. The spot gold and USD index chart has a dramatically change starting about a week ago when the spread getting wider. Last week, the spike (statistics always ignore spike because they are abnormality unless continues which become a jump or drop). This has to be watched. The conspiracy theory of gold price suppression may not be completely true but the function of gold may finally realized.

2008.09.20 Yet another better week. Situation has continued to improve. Value may be recognized again. This week half a trillion of dollar is injected to the market or increase in money supply. Theoretically this inflationary. Keep this in mind. It has been a painful week for gold bug. Like Richard Russell says the last man stand may who still hold on to his/her gold.

2008.09.14 A better week for precious metals due to the financial crisis. But we have to agree the brilliant plan that can bring down that does not suppose to happen. The financial crisis did not create another record gold high. It only creates a short covering rally. The dark force still can do a lot of things.

2008.09.07 September may not be a kind month for precious metal by its nature. The quarterly international trade settling will have a higher demand on U$ which could further compress precious metal.

2008.09.04 This is another puking week for gold bug. The low has been keep on being challenged with the unbelievable rising U$. By doing the relative strength analysis, we can see gold is getting out of tight coupling with U$. This chart shows the detaching.

2008.08.30 This week life has been breath to the precious metal. Strong fight back. Unfortunate, there is unwinding of U$ short and stealth buying continues to give good support to U$ which is negative to gold. We should also consider the possibility of someone wants to hold the U$ high and gold low to accumulate gold.

2008.08.28 Gold has the traditional function of reference currency. When a currency has higher value, gold has a lower price in that currency. This is what happens to the U$ that has an equivalent of U$35 per 1 oz of gold to now at U$800+ because U$ is devaluated. This is the macro relationship. In micro relationship, each of them can have their trend and direction either go in parallel or in opposite direction. During the international trade settlement period, although U$ may be devaluated, but the demand of U$ to pay the current account, it could temporary detached from the relationship with gold to a certain extend. Now is about time to settle the quarterly trading account. U$ is in fact getting higher with the help of weaker GBP, Euro, and Japanese Yen. In the past, gold will behave like a commodity in this period of time and lost its exchange rate with U$. However, the most recent movement, being alleged by gold bug that the gold price is manipulated, gold is significantly suppressed. As the result, gold falls more than the rising U$. Starting two weeks ago, a new phase may be started. Gold is rising faster than the falling U$. In some situation, it rises in conjunction with gold like last couple of days (the green circle area). I have mentioned in previous entries. This could be critical because if this becomes the trend, the technical term is gold detached from U$. This could create a spectacular rise of gold price. Please take a moment to review this chart.

2008.08.24 Precious metals got some relieves last week lead by the recovery of platinum which has been making a U$700 correction which is 35%. Silver also took the similar trip. The downside has not been quite proportional to the gain of the U$ which may signal the U$'s current strength is in doubt.

2008.08.16 Precious metals like Rodney Dangerfield, has no respect. Despite the Russian-Georgia conflict, no one believe any problem around the world. Strange enough people prefer financial even after UBS and JP Morgan announce more write down. Is it like Alan Abelson says "mass narcosis?" Anyway, all inspired by the rally of USD. Could it be the huge demand of U$ to be spent at Beijing. If so, would the U$ fall when people convert out of U$? We'll know in two more weeks.

2008.08.13 It is very important to point out a special relationship has been developing between USD index and spot gold price shown in this chart. In the last couple days, when the spot gold and gold stocks have been so suppress that it seems the trend never breaks, gold stocks lead the rebound yesterday while the USD Index continues the upward movement. Today, USD continues to move up. With the bad news from UBS and others, financial sink. This time gold stocks move much higher and break their sympathetic tie with the financial sectors. Two years ago, gold had a short period that detached from USD. It could be my wishful thinking such detachment occurs prematurely again. If we think at a deeper level, the bankers of American (especially China and Russian) would not let the USD to go down the toilet bowl but inflation is more than 10% the fundamental points to a higher gold price which is gold's function. The USD has to be at current level to protect the bankers' interest, it may even get higher. If such development is demanded by the bankers, gold will detach from USD with the help of sinking financial sector. The implication will mean commodities will resume its course to the north. The bankers are very powerful now as illustrated by the weak American response to the Russian and Georgia conflict.

2008.08.11 Gold and precious metals were massacred. It began with platinum in mid-week, down to mid-U$1,500 from U$2,100. All were driven by the false security of the financial sector guaranteed by Hanky and Bernie.

2008.08.05 Gold and oil follows NG fall below the 200MA. Both are in the oversold zone. Will it rally soon? I wish so but the market may have another agenda that may not please me. GLD has 20M shares exchanged hands today; two time of the 200 days volume average. CBSI's volume is 50% above the 200MV (200 days moving average of volume). Gold Future EOD has violated the U$888 support. We just have to see any rebound. If not we have to see support at the U$820 level.

2008.08.04 Spot platinum is at U$1569 at the time of writing. Platinum has fallen from the historic high at north of U$2,100 to this level or 27% down. Gold did not make the U$1,050 (the traditional 2:1 ratio) but gold is at U$903 now which is about 15% premium to platinum. It is not necessary to say gold will fall below U$800 but because the precious metal are interrelated, we should see gold takes the cue from platinum to pull back. It is the famous market law: guilty by association.

2008.08.03 Gold is gold bugs favour and also Sir Greshem's treasure. While people are struggle with the credit problem, they have no time to pay attention to store wealth. So does the inflationary problem of money flood.

2008.07.27 Gold has suffered quite a bit of setback from the previous few weeks. The crust of the puzzle is that why gold falls in the face of a weak U$. The U$ Index vs Gold Spot chart shows the inverse relationship changes that gold price gain lagging the fall of U$. When USD index falls below 72 (when the red line above the reverse scale of 72) gold does not follow. The relationship can be maintained for a long time with gold price suppressed. In the longer term, the relationship would be restored. In another word, gold will make up the gain.

2008.07.26 Precious metals' setback continues. Market psychology is in action. Confident in financial is growing which leads people out of the precious metal sector back to financial. This could be the temporary improvement of financial. It could also people want to do quick flip and gamble on financial. If it is the later, volatility will increase not reduce.

2008.07.21 Precious metals have a set back last week. On my chart, gold did not recognize the pull back at all; forget correction. Today, gold is on the steady steps to move up again with a sudden drop of USD below 72.

2008.07.12 This week was a brutal week for the gold bugs and gold shorties. The fall was hard and unexpected due to higher U$ and the fall is also unexpected due to our friends Freddie and Fannie. Both silver and gold had a breakup accompanied by more than 2x the 200 day average volume. There is definitely include some short covering. The more important is to give value investors a wake up call if they believe the PE of the financial means any good. Canadian banks are not different from the American cousin in terms of lending practice in the States. The eruption of bad new will significantly crushes the current price to a even much lower PE and higher yield. One group of financial should be particular vulnerable. It is the Canadian insurance group which has to invest, usually in lending mortgage, to build up its lucrative business in last few decades. With the contraction of the American real-estate market (residential and commercial) those who rely on the American market will suffer most. For those who have market in the Asia could face the same problem if the Asian house market has problem.

2008.07.06 Precious metals may be at a very critical junction. There are forces of different directions pulling and pushing which make the direction in short term very cloudy. The biggest worry is the increase of interest rate which will fizzle the gold rally. This is a very good point but we have not considered the inflation factors for a quarter of century. In 1981, the average price was about U$550. U$ purchasing power has dropped 60-70%. The value of the reference currency should be triple. In short term, the volatility could be getting more vilolent.

2008.07.01 According to this article from Business Report ECB vows to keep gold prices stable, ECB has sold 37 tonnes of gold recently but the gold price is recovering nicely to a two and a half month high. Looks like the lid for gold price may not be that tight.

2008.06.30 Today gold pull back a bit but still very strong. Spot price continue to advance. Gold future is down U$3. Does it mean gold is topping as U$ rallied an impressive 30 base point? In order to analysis the situation one has to understand today is the triple or quadruple or quintuple etc. day. Today is the month end, quarter end, half year etc of the year for the financial clearance. As long as the world uses the U$ for payment, there is always a demand for these critical day for payment. What we need to see is the impact on commodities. Last time when such U$ move occurs, gold, oil and silver drop like a stone. Today, you can say just a little bit. After saying this the rally of the commodities is going to take its toll on the world economy as it forcing the rise of inflation. World would suffer especially the under-developed area (not necessary country-wide).

2008.06.29 When the gold price has the consensus of downward direction and a strong U$, things get an 180 degree turnaround. It is possible to have another 180 turnaround but the fundamental has to support it but none is found so far. Apparently, the thesis that American would do everything to defend its pride and U$ or U$ is strong may diminish into shadows. Yet there would not be any thing but volatility especially when the emotion is at high tide. Hand on to the hat.

2008.06.26 There is a number of commodities in contango which means future price is higher than the spot price. Due to the future commodities price are discounted for the present value, the future's price is generally lower than the spot price if the price is steady. Except during the seasonal changes such as the fuel price in winter is higher, there is no contango. In such scenario you compare the future price of same month of different year. If inflation is mild, contango does not exist. This contango is very serious. This indicates either extreme inflation or extreme demand built-up in future. According to Don Coxe the Fed does not like so many commodities in contango and would do anything to kill it. Yesterday, in a few hours the gold future fell below the spot price before the FOMC (Federal Open Market Committee) fund rate announcement. Right after that the future caught up and passed the spot by end of business day. This morning almost all metals, precious and base, are in contango. I would agree with Warren Buffet that 'I think the 'flation' part will heat up'. So the inflation evident is there. The trend is firm. Fed seems powerless to control the inflation by sacrificing the economy which could be the reason they throw in the towel to control inflation. However European and Asian countries central banks are much hawkish. At the time of writing, USD Index has fallen 70 base point to 72.66 since yesterday morning. More may come. The devaluation of U$ rescued the oil price even there is a ridiculous increase of 2.8M barrel distillate fuel inventory in one week at the beginning of air-conditioning season.

2008.06.25 After a couple days of falling gold price and stronger U$, the Fed watching team finally gets the answer: no rate change. During this period, gold price and U$ has been moving in all possible combinations. Tonight, USD falls 33 base point after the Fed announces the stay put and the USD has sunken below 73 from earlier 73.30. This is a prime example on market can be solvent as long as it want. But someone has to give. Dr. Michael Berry (http://www.michaelberry.biz/) wrote in today's Morning Note that the Fed may have to do two more rate cut due to: 1. inflation is no more a concern now 2. housing market is still free falling. This leads to the fact that we all have to live through this inflation cycle. We have to invest on either wealth storage (such as precious metal) or wealth creator (like great business franchises).

2008.06.22 An extreme volatile week for precious metals. Platinum was leading and lagging than the leader of direction rotated to silver and gold. The day range is also wild depending on the news. Now it is all in the pressure cooker. How are we going to keep sane in this maniac market? We have to understand the role of gold and precious metal. If we think gold is store of wealth on top of ever increasing rapidly industry and medial use, inflation fear around the central banks is a good story for gold to rally. One should understand even Fed increases the fund rate for U$, it is only a minute percentage, less than 10% of the inflation rate published and tens of percentage of the real inflation rate.

2008.06.15 USD index rises above 74 because Fed has to raise the interest to meet the demand of the creditor; they want more. In the last 9 months, U$ loses it value at lease 10%. Could Fed raise interest rate by 10% right the way? If not, by raising a one or two percent is only a gesture without real benefit to the creditor. But the consequence is panicky (not Bernenke). Entertainyst blows that China demand higher interest rate. Really. If the American economy sinks and the European and African friends have not picked up the export slack, who is going to feed those few million of new grad coming out each each? If you believe gold is the store of wealth than high inflation would just mean higher gold price provide the plunge protection team is not in action. However, if the Central Banks admit there is inflation, the lid on gold price will be blown off.

2008.06.07 Has the fat lady sung? I am not sure is there a fat lady but certainly I have not heard a fat lady sing. Yesterday I say the gold could rise by U$30. I missed it but it is not over yet. The pressure is building. What has not shot may be shot later. So the burst rise or catch up has increased to 4% or U$40 because the share index increase by another 3% today. The last few weeks have weed out the faux-goldbug. Even the real one are dizzy. I would say only the stupid goldbug are hanging on. I don't believe we have a clear path to Damascus (my mentor John Budden's words). The volatility is just the same. Like Richard Russell says the bull always through you off his back before the spectacular phase 3.

2008.06.05 Every body is saying that the high energy price will curb the demand. This is North America-centric. When the world believe only the Americans have a massive demand on NG, the price of NG dipped when LNG is heavily imported by American. However the LNG now ships to China et al. When the oil price is holding up at $133 and drops to $122 everyone says the oil barges are circling the harbour to wait for better price but have to dump at much cheaper price. With all these in backdrop, the NYMEX oil price jumped U$5.49 when the ECB declares no fund cut. If there is no demand for oil the price should stay put. Now the talk to keep the oil down does not work. Gold price may be released from it shackle soon because my gold stock indices jump 6 points or 3% today. This could translate to U$30 jump in gold price while the gold future price has been held at U$875.50 today.

2008.06.01 Fed rate and inflation are the crux of the matter. It swings the direction of gold and silver other than the panic. In a very short term, the fear of a higher U$ drives the gold and silver down. If you step back, you can see the U$ rally because Fed has the material need and talk about to increase rate to fight inflation. Standing outside the circus ring, you can see clearly there is no way the Fed can raise rate at a rampant way to beat inflation fast which means the function of gold and silver as inflation protection is intact. Especially during the election year. Benkie just don't have the ammunition to convince the financial and export guys to accept this. Look beyond the fear we could see the higher price of precious metal. In short term, fear dominate everything. Yet there is hint, the fear is subsiding.

2008.05.23 Gold and silver are oversold. However there is no peaking evident of high volume. Could this become a pennant pattern? USD Index has been very volatile. It struggles the fall vigorously. This becomes a very high power struggle between the gold bug and the central banks.

2008.05.16 Is it a turnaround? It is not over until it is over. Dr. Berry's May 16 Morning Notes has pointed out that the U$ may look like bottom out but it is still in a major bear market. Without increasing the Fed rate, U$'s rally can only be sustained by other central banks' rate cut. ECB and many other bankers have announced that the high inflation rate will give no room to rate cut. Don Coxe of Harris BMO also points out that the demands will drive the inflation. The commodity inflation may turn to a bubble when contango exists and the speculators drive the spot and the future price. (Future play requires a leveraged margin that can drive the volatility of the price.) But we are not there yet. All these fundamentals backs up the rally of inflation barometers. But don't jump in with two feet. The highly anticipated Franco-Nevada and Sprott IPO suffered set back. Speculative play for retail investors are dangerous.

2008.05.09 After some nail biting days, the gold has stopped the descend while USD stops its ascend. Nothing much to cheer this point until the price goes back at least to U$900.

2008.05.04 Would it be necessary to invest in gold which has the traditional role of inflation hedging? Would it be effective? To answer that you have to believe gold has that ability. For some gold like US$, it is there and someone guarantee the value then why not use the fiat which is much more easy to carry and widely acceptable. Of course the major difference is that you cannot print gold. Economic aside, lets look at history. The following is quoted from the Casey Research's communication on April 30, 2008 with the subject 'Gold Shares: Different This Time?': "During the last major inflationary period in the U.S., 1962 to 1982, gold shares rose, on average, 1,503%." This is annualized gain of 14.5%. The bottom line is: are we going to experience high inflation. The answer is at the supermarket. Check your grocery bill. It does not lie.

2008.05.03 In the article by Bix Wier "The Battle of May Day" of LeMetropoleCafe.com, Weir identifies a massive withdrawal of physical gold and silver that could related to the massive delivery at COMDEX last week. As we know the commodity derivatives market (commodities represented by a piece of paper) may represent the same piece of commodities a few time, when the delivery happens the multiplying effect will mean a run to cash out the commodity (an equivalent of bank run) could kick off the unwind of the derivatives market. This battle will not pretty as Eric Sprott et al have identified in the danger in the U$500T derivatives market Deriding Deriving: Theory versus Reality, December, 2007. One may not agree with me because the paper market has fallen so bad how could it reflect the demand. My conjecture is that if the shorties do not sell the delivery contract you have to delivery the merchandize. If there is no way to fulfill the contract it will spell disaster. Can the shorties buy up the contracts? This also calls for disaster.

2008.05.02 Entertainysts continue to explain that Fed's stopping to cut rate will mean the end of credit crunch. Everyone buys the story of booming financial. Yet no body ask the question after the diluting of the equity, reduced working capital, epic rate of foreclosure and high inflation rate, how on earth the return could be high? No one could stop the anemia of gold until people recognizing financial is a black hole.

2008.04.30 The most expected rate cut realized. The verbiage is cautious. Most important is the hint that stimulus may still be needed. However, the end of rope is visible. Dow Industry returns all the 120 points gain earlier. The market may realize that the financial fiasco will continue without any bail out. At the same time inflation will be resulted from the bail-out earlier. USD will not able to defense itself. USD falls from close to 73 in the morning to 72.50 tonight. The volume of GLD is not high enough to call for a bottom of gold but it is stabilized for the meantime. WTI is recovering after the U$3.00 loss which has no reason. Another unconfirmed news by Globe and Mail is that Iran will only accept Yen and Euro for oil. If US takes any military action to straighten it out, watch out the price of oil and so does gold. However, the chance has to be low because this will provoke EU and Japan which have strong influence to the American. Anyway, the gang succeeds to hold gold below the U$900 at the end of April. Lets see what happen to May. With all the inflation building in, the summer of 2008 may prove to be the summer of commodity. The stubborn U$3.90 copper may be the hit.

2008.04.28 USD has retreated a bit this morning and helps the recovery of gold but not much for silver. The widely expected gold correction may finish with all these changes. The volume of GLD surged to 22 million on last Thursday which also could indicates a bottom. The lower price of silver may have a turn as Mitsui Mining and Smelting of Japan has developed a catalytic converter for diesel engine which traditionally using high price platinum.

2008.04.24 USD shoots up to 72.6 today. This spells disaster for gold because the majority seems believe no safety blanket is required anymore. They can jump with four limbs back to the financial sector. With the low unemployment and low inflation (quote and quote by American and Canadian government) gold will not be needed to store the value. If this is true who is buying GLD. Yesterday's 18 million volume is less than today's 22.8 million. Who is really buying. The 22.8 million shares of GLD represents about 2 times the 50, 100, 200 day average volume. The down volume is not small. The current price of gold has reach the neckline which could provide some resistance. If not we are going to see the U$850.

2008.04.23 Gold has another dip today. Gold stock falls accordingly. Again the fall of gold and stocks coincides with the fall of the major American banks: ML 3%, C 2%, JP 1%. As commented last week, the head and shoulder warrants caution. It happens. It may be good news as the volume is up sharply which may be the time the shorties cover their short.

2008.04.20 The financial sector had a incredible returning week. This draws a significant money from the precious metal market which has exhibit a head and shoulder pattern for gold. Although the fundamental does not support the head and shoulder but it is here. The best things would be sideway action to work off gold's overbought.

2008.04.13 USD has been trying to maintain the upward position but continuously fall below 72. Although gold was much higher at this value of USD, nonetheless gold has been trading 5-10% below its historic high. If we consider this is the peak of gold then we may escape the usual practice of regarding a 10% retreat as the normal path of correction. Silver suffers more. Why? But is it getting everyone nervous at the uncharted territory? Silver may have correct more than 15% but its rise also spectacular to visit its historic high of U$21 again. So we need some time to digest the current situation. Would precious metal retreat during the summer to satisfy the folk wisdom of 'selling in May, go away'. Perhaps it is depending on whether the credit crunch complete its unwinding. Although the housing stocks in US have been recovering but would it be just a dead cat rebound after months of free fall?

2008.04.05 Precious metals have suffer quite a bit. The down draft has temporary moderated. USD once again shrank below 72 with the high unemployment rate. Inflation, according to Fed and BOC, is down and no threat at all. Fed and central banks have orchestrated the 'R' scenario to lower interest rates. So how to hold up USD above 72? It is a big challenge. If it does, gold, silver and other base metals have to move up. Dr. Copper has stealthily approaching U$4.00 again. If you do not believe in Dr. Copper, perhaps you can trust Mr. Aluminium who is recovering from the recent bottom and re-challenge all time high U$1.40.

2008.04.01 This is no April Fool Joke. According to Casey Research's April 1, 2008 Daily Plus, the central banks is leasing gold at a negative rate which literally increases the incentive to glut the market with physical gold supply. Should someone leases it and short for profit, you can expect a sharp rise somewhere down the road. Of course, if you are shaken out at this point, your lost cannot be recover.

2008.03.30 Gold fell from U$1,030 to U$903 but closed the week at U$936.50. The ride has not been smooth. This is a fluctuation of 13%. But look at Dr. Copper who is quietly creeping up on us while the entertainysts declare no decoupling and world will go to recession because American is the master of the universe. They even point out that China will experience a recession with a meager 8% growth. When did you hear an economy is in recession if it has 8% annual growth. The increase in these GDP may or may not be really productivity gain but one thing for sure it includes plenty of inflation which is reflected on gold. Fight the inflation, you will see the commodity coming down but it is not the whither of demand, it is just the deflation.

2008.03.22 Precious metals fell sharply in term of U$ but not in term of %. Financial sectors fell over 30% in days that is sharp. As Fed lower the rate, U$ SHOULD get weaker but it is counter intuitive that USD index rose more than 2% from just under 71 to close to 73. Market is smart but we should observe the long term trend other than short term volatility. It is possible to change the trend but the fundamental has not change.

2008.03.14 The psychological U$1000 barrier does not have any real meaning. So passing it or not does not need celebration. The real celebration is gold continues its weekly historic high close. Within the week, it backfills to avoid the technical parabolic. The watching of gold could become a sport. Since USD closed below 72 this week pushed down by the Fed dumping U$200B to the market. But obviously it does not save Bernstein. Would the Fed resorted to Paul Volker's high interest rate solution? Eric Spot has pointed out in his famous Pick Your Poison article that Fed will give up high interest rate to avoid deflation. So the problem is getting worse. Would it be fixed by the market as Jim Rogers said on CNBC? It depends on which market. I don't think it is the Americans'.

2008.03.07 As suggested by the chart of gold EOD, the U$991 is a major barrier. With the demand (volume shown by GLD and SLV) suggests momentum is gathering. There will be a break through but when is the question. Perhaps it has to be as long as next rate cut. However, this translates to a weak U$ so does the economy. Hold on to your hat.

2008.03.01 Gold has to face two major challenges next week. The first is the sales of IMF in action. The news did nothing to the demand but this could due to the knee-jerk reaction to the falling U$. The second is the psychological barrier of U$1,000 which could give shock treatment to many non-believe on a 'non-merchandise' metal. Let me step aside the debate of reference currency, it is a rarity which immediate translated to collectable. Just like art its rarity implies high demand. If we use the C$800 break up as the landmark, it points to a possible target of C$1,070. What would that be in U$? U$1,100? If something can increase your asset value (in U$) in an inflationary environment, it is not a bad investment.

2008.02.23 Sometimes you have to be amazed by the technical analysis. The two channels on the spread between the U$/C$ gold price is such a coincidence you wonder why. Gold is performing well but not as well as the light coloured precious metal. Could this be the effect of the GATA or Punch Protection Group? I believe it is more likely the psychological impact of the old saying "gold is not an investment". In a difficult market, let's don't argue on academic but follow the money and fundamental. Dividend, interest, distribution, royalty etc are the outcome of investment so does capital gain. Why there is taboo?

2008.02.18 Is it top or not is a question we should ask independent of bull or bear market, nothing to do with the faith on the yellow metal. Although technical analysis insists that history repeats itself all the time but which segment of the history it is going to unfold is what we have to be careful. We see the strength of U$ which pushes down gold happens last five years before its decline. This year we may have an exception that gold does not decline much in December. Gold is usually moves in sympathy with oil, silver, platinum and base metals. Platinum has jump 10% in just 10 trading days of February. Copper is pushing to get beyond U$3.60 to break up the triple top. Oil looks like completes its correction and challenge U$100 again. All these create a very high negative potential for gold which could be the driving force to another gold rally. The question we have to examine each day would be: is gold detached from U$? There are more and more confirmation.

2008.02.10 After a week of weakness, gold resume its climb steadily while USD maintains its 76 range. If there is any proof gold has detached from U$, here it is. Gold has regained its official reference currency (the yardstick to measure the value of currencies issued by governments) whether the government or World Gold Council recognize it or not. As result, U$ could rise or fall against other currency but its devaluation status is reflected by higher gold price.

2008.02.02 A volatile week for the metal and stock indicates the tug of war between the gold bug and non-believer. Major up trend is strong.

2008.01.26 Is it short covering or is it really gold continue the rally? Market has been divided into two camps: one say the bull is awaken and the other is gold has peaked. The pooh-pooher uses the 1980's U$850 example. Right after the peak, a significant collapse. Yet these people failed to recognize the rise to U$850 was a spike of a very two days. Now that the U$920 box is reached from a slow ascend. The gold bug camp believes the gold standard monetary system will be either official or unofficial re-instated. What if the rule to back the currency never come back? Although gold's industrial usage will continue to increase and I believe it will exceed silver and platinum in many ways (like in electronic and medicine) it is not recognized. Could gold maniac be the modern tulip maniac? They do have similarities: no manufactured in will, supply is slow, it does not generate anything other than emotionally satisfaction. If this line of argument is correct than why diamond's price is rising? I believe even a commodity will be adjusted by inflation. So gold will be more expensive. On top of these all other artificial demand (such as ETF) will push the price farther. Until gold standard is on the horizon, gold price may be just regulated by elasticity not by the fear of inflation.

2008.01.18 Gold has been backed down before U$920 due to the weak market. This is an irony because the weak market reflects the weak U$. But with the margin call, people have to settle their account by selling good stuffs such oil, gold and resource sector stocks.

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