Real Price of Gold – Things Are ‘This’ Far From Changing

Hold your thumb and forefinger tip so close that you can barely see any light between them.  The space is about as thin as the support line on the first chart and the bottoming pattern neckline on the second.

gyx

GYX daily chart

The industrial metals (including ‘Economic Doctor’ copper) are on the verge of losing support and are a non-confirmation of any strong economic near-future.  Yes of course, it is because of China’s growth problems and other global issues.  Will the US and newly inflationary Japan pick up the slack?

We have been noting economic strength in the US (sparked by the Semiconductor sector) but this will bear watching closely now for signs of deceleration.  The industrial metals should be in higher demand if all is sustainably well.

au.gyx

Au-GYX ratio daily chart

The Gold-GYX ratio made a hard bottom in February.  The ratio will go much higher if the neckline at the 200 day simple moving average is exceeded.

Au rising vs. industrial metals (positively correlated to the economy) would go hand in hand with a renewed phase of economic contraction and the all-important ‘real’ price of gold would rise if this spreads out to other commodities.

au.cci

Au-CCI ratio, weekly chart

Of Course, on the big picture the real price of gold has been marching higher most dynamically since the crash of 2008.  The last 1.5 years of indignity for the gold “community” has merely been a waiting game; a noisy and cacophonous waiting game.

When this last chart breaks down below the green moving average, the age of economic contraction and gold’s real bull market is over.  The thing is though, it has not even failed the blue moving average.  This chart mocks global policy makers and their supposed economic remedies.

2013 could be a great year.  Never has there been the potential for so many to be so off-sides in the financial markets.  Right now gold bugs are being told they are off-sides as every week new negative reinforcement of their stance comes into play.  But that is why we map out the things beneath the surface, like the HUI correlation to the US stock market and ratios like Au-CCI (or on the positive side, AMAT-SOX for example).

You either want to look right – in going with current trends – or you want to be right, in using tools (including your own bullshit detector) to see the new trends.  I hold several ‘regular’ stocks (less Apple, a trade that failed yesterday) that I like as I play uncommitted trend follower.  But the real play is setting up and it is tied to economic contraction, which of course is and has been the trend most markedly since 2008.  Gold vs. industrial metals is very close to a signal.

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