Today I am starting to wonder if we are at the beginning of a
decoupling. Anyone who can read a chart can see that the dollar is
on the verge of a potential breakout -- maybe it will, maybe it
won't, but the chart along with the bearish sentiment is not a
secret. And yet gold pops. And bonds rally. The traditional
analysis would be that bonds are giving a deflationary signal and
gold is giving an inflationary signal, and one or the other will be
right or wrong. But what if the market is giving the message that
deflation is coming (what I happen to believe), but that deflation
will be accompanied by a lack of faith in all currencies? Then the
divergences would make perfect sense. It may be that today's action
was just a strange day caused by some doings in the gold market
that have nothing to do with fundamentals, or maybe today is
telling us something important. I guess I'm just ruminating -- If
the notion of deflation plus currency fear is correct, then that's
another warning that we are embarking upon C down.
Posted by alslayton on 4th of Sep 2009 at 11:26 am
I think you are SPOT ON in the projection that the market
is telling us that what we face is a deflationary scenario.
The risk is for a DEFLATIONARY recession or at worse a
DEPRESSION. The nations of the world will try to reflate by
printing massive amounts of paper. Currencies are to be
avoided and GOLD will be the store house of value. Bill Gross
yesterday on CNBC was talking about the 30 year treasury being
attractive. Isn't that an outlook for deflation?
However, my thought is that it will be two or three years
down the line before that takes place, as the STIMULUS fails to
turn things around.
Gold rises when it senses something is inherently wrong
somewhere. What that turns out to be will be determined later. A
rise in gold is good for gold but bad for something that is about
to be exposed, and with mercury retrogade starting to kick in for
the rest of this month, I would imagine it will surely mean more
downside in the markets.
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Is today the beginning of a major change in inter-market relationships?
Posted by puma on 2nd of Sep 2009 at 06:56 pm
Today I am starting to wonder if we are at the beginning of a decoupling. Anyone who can read a chart can see that the dollar is on the verge of a potential breakout -- maybe it will, maybe it won't, but the chart along with the bearish sentiment is not a secret. And yet gold pops. And bonds rally. The traditional analysis would be that bonds are giving a deflationary signal and gold is giving an inflationary signal, and one or the other will be right or wrong. But what if the market is giving the message that deflation is coming (what I happen to believe), but that deflation will be accompanied by a lack of faith in all currencies? Then the divergences would make perfect sense. It may be that today's action was just a strange day caused by some doings in the gold market that have nothing to do with fundamentals, or maybe today is telling us something important. I guess I'm just ruminating -- If the notion of deflation plus currency fear is correct, then that's another warning that we are embarking upon C down.
I think you are SPOT
Posted by alslayton on 4th of Sep 2009 at 11:26 am
I think you are SPOT ON in the projection that the market is telling us that what we face is a deflationary scenario. The risk is for a DEFLATIONARY recession or at worse a DEPRESSION. The nations of the world will try to reflate by printing massive amounts of paper. Currencies are to be avoided and GOLD will be the store house of value. Bill Gross yesterday on CNBC was talking about the 30 year treasury being attractive. Isn't that an outlook for deflation? However, my thought is that it will be two or three years down the line before that takes place, as the STIMULUS fails to turn things around.
SPX 30 (two valid counts)
Posted by steve on 2nd of Sep 2009 at 07:38 pm
Further, commodities (see GSCI Commodity Index) and Crude Oil are now considered to be in downtrends.
Gold rises when it senses
Posted by u00sas3 on 2nd of Sep 2009 at 07:23 pm
Gold rises when it senses something is inherently wrong somewhere. What that turns out to be will be determined later. A rise in gold is good for gold but bad for something that is about to be exposed, and with mercury retrogade starting to kick in for the rest of this month, I would imagine it will surely mean more downside in the markets.