And for believers in honest monetary systems, the message sucks. The message is that people can be rewarded for speculation printed out of nowhere. Rewarded? They are getting rich! Meanwhile, the keepers of honest monetary values are getting hammered.
SPY-GLD ratio, monthly chart
Furthermore, if the measured target – which after all, has been staring us in the face for months now – is to be registered, it is valid to wonder whether will it come from an absolute moon shot upside blow off in equities or a final, bear-ending but vicious drop in gold.
Look, the Chinese proverb is our friend now. We live in interesting times and we need to recognize that and adapt to it in our own ways. I decided to throw out my gold bug hand book for the duration and I even play stock bull a little. But there is very likely a climax somewhere out on the near-term horizon and it is going to be really interesting.
 I am well aware of the Squid’s bear call on gold. Here, we’ll let Otto have the floor on this one. These clowns have a long history of either making the most dumb ass calls on gold or perhaps just maybe promoting an agenda to two. Positive contrary indicator aside, it does not change the message of the chart above, which is itself not a directive, but a distinct technical possibility if not probability.
The stock market vs. gold (SPY-GLD ratio) has a measured target significantly higher by this big picture monthly chart.
SPY-GLD Ratio, Monthly
But it is very over bought by the daily view, which also can be interpreted to be at an interim target at the least.
SPY-GLD Ratio, Daily
Yes, I get it that the crusty old gold bugs are an anachronism and life is all about texting, tweeting and buying all the stuff advertised on idiotic super bowl commercials. I get it that the stock market is filling up with all the fools that never saw the financial crisis coming and are now relieved that it is finally in the rear view mirror.
I get it that all those hedge funds that chased gold have realized the error of their ways. The crisis is over, there is no inflation. They were the screw balls that messed up the CoTs and gave us the biggest warnings by the way. Better these low lifes are flushed. I get it.
Gold bugs may want to avert their eyes, but they should look anyway. I am making no comment on the reasons, just on the technicals. S&P 500 in relation to gold continues to break upward. There is however, some resistance at the current level. If the ratio gets through there the target objective is noted.
Well, I wouldn’t bet too heavily against it just yet. Lot’s of room for lower support levels still to be tested. Oh but gold is gold… you don’t buy it to be a casino patron, right? I hope not.
Well, Au-Euro is breaking down in that the GLD-FXE ratio is dropping through the lower Triangle line today and the supportive EMA 40. Of more importance is the EMA 60, which needs to hold or else gold is breaking down for real in euros. Hey, I just do the charts and interpret what they say. [edit: Chart edited to show another triangle bottom w/ the black dotted line. But again, the moving averages are more important and the weekly EMA 60 would have to be broken to reach the dotted line]