Trying to make sense out of market moves can be a short path toward getting yourself committed to an insane asylum, but for those of us on the edge of it anyway we like to give it a try. About 10 days ago I pointed out that the Spot Gold Trend Broke Down and I've been looking at the Gold chart to see if it confirms the trend change which I think might be in sync with a change in the fundamentals...
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Over the last week or so, the price of Gold has bounced fairly strongly. So the question is being asked - "Is the Correction over and will the Bullish Trend resume?" Personally I am not convinced. In making sense out of the bounce in Gold I look for key events and correlations that might help me make sense out of things.
Some of the fundamentals have definitely changed. Trump was elected early in November and the Gold price immediate started selling off while other RISK ON Markets (like crypto) started rallying hard. Since then we've had the Federal Reserve come out and pour some cold water on future Interest Rate Cuts which has also strengthened the dollar and hurt Gold...and Gold went on to hit a low on November 14th. What has happened since then?
The outgoing Biden Administration controversially approved Ukraine using long range missiles against Russia, who had previously signalled that this was a big "Red Line". Then we've had Ukraine use those US Long Range Missiles (6 days ago) as well as the British Storm Shadow Missles (4 days ago) and then Russia has responded by firing back some Intercontinental Ballistic Missiles for the first time (3 days ago)...and Gold has been rallying through these events.
One of the big drivers of Gold demand historically has been Geopolitical Instability and with Nuclear Powers escalating aggression against each other you'd have to acknowledge that these events could be playing a part in driving the markets. How would we confirm this theory though?
I look at the stock prices of Weapons Manufacturers to get an idea of how more, or less likely war can be. These guys make money when the shit hits the fan so war is good for their business models. So lets take a look at a couple of the big ones....
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Here is The Boeing Company. Very similar features to the Gold Chart. A sell off early in the month of November, a low around the 14th and then a recovery rally. Is this showing us a short term correlation with Gold?
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Here is Lockheed Martin. Some similarities here too. A big selloff heading into the 14th of November but not hitting a low until a few days later. Then a recovery rally over the last week.
Of course this is not conclusive, but I am seeing enough correlation between these 3 charts to draw a cautious conclusion that the rally in the Gold price may be related to these war escalations that we've seen over the last week. What I know from previous rallies like this is that once things settle back down the more regular monetary fundamentals tend to take over. So I am not getting super bullish again on Gold any time soon unless World War 3 does actually break out in earnest...in which case we've all got bigger problems to worry about than posting on Hive.
I felt a bit of optimism when Trump won big time meaning I think he could pull off stopping the Russo-Ukraininan war. When Biden took the gloves off the Long Range missiles to defend Ukraine I believed that the deep state wanted to make sure that a peaceful negotiation was impossible. Pure Insanity and evil. I still believe Trump can pull this off but the current administration is desperate to keep this transition anywhere close to being peaceful.
I feel the same way. To have a lame duck president making such a massive change to foreign policy that could lead to an irreversible escalation of war as he heads out the door is so horribly irresponsible it boggles the mind. This quote comes to mind...
A peaceful resolution of the Ukraine war IS impossible. There is only one way to get a ceasefire: to give Putin what he wants. And that is no option for the Ukrainians. And for everybody else in the region. So once more Trump is talking BS. He will end no war, not there nor in the middle east. He seems to operate without any understanding of the reality. All the factions involved in those conflicts have their own agenda, Israel and Iran have, and Putin as well.
Putin cannot make a agreement in which he compromises. If he does, he is done. Politically dead, and may be physically, too. He has sacrificed 100k Russians in this failed "special operation" so far, he can't just say " Oh well, lets go home then."
And in Iran the situation is similar, admitting weakness is no option for the Mullahs. And Israel does what they believe is neccessary to keep their country, what ever it takes. They dont give a moist fart what Trump says or even what the UN says - we have seen this before.
It is not war, it is Dedollarization that is in play which is spiking the GOLD. The global south is dedollarizing via GOLD...hence Gold is bullish. The global North is dedollarizing via BTC hence BTC is bullish. WE have this interesting time and interplay until 2030.
De-dollarization is a bigger macro trend with a longer term horizon. I am still bullish on Gold over the long term, just expecting a bit of a correction or consolidation in the short term.
Yes, that's true....but that trend is playing out right now with central banks buying GOLD. So 2025-2030 will be an interesting inflection point from the viewpoint of geo-economics. If that is the case, then we will see sustained movement in GOLD and BTC during this period.
It’s going to be all over the place for months. There’s too much going on for it to stabilize.
This is a classic example of hedging. As you mentioned, geopolitical instability and the classic instability and volatility in risk assets during election season makes gold climb. Bitcoin has broken out, as many speculate it is "digital gold" but it has yet to be tested in a downturn.
The gold price has always reacted to geopolitical events, at least if they are significant for the world economy. Sure, there is always some up and down - the traders want to make profits, and without movement there is no profit margin. But over all the gold price reflects the crisis fear of the investors. When things get hairy they rather opt for the safe play, rather than for risky deals. If the shit hits the fan we will see prices we may not think possible now, may be 5k or 10k or whatever. And then we will wish the price had stayed low...
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@thehockeyfan-at(1/5) tipped @buggedout
I heard gold yields alot of cash when it is used for trading. And it is less risky too. Do you know much about gold and is this statement true ?
@tipu curate
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@tipu curate
Sorry, please curate posts not older than 1 day.