PM Revue


Hello friends. Not a whole lot to say here. I continue to be very bullish, but I've stopped adding to my core position for now, as we might get a nice dip here to exploit. 

Trading-wise, however, I've been buying red days and selling the bigger green days, and I'll continue to do that until it looks like we're emphatically breaking out in one direction or another.  

It can go either way, but the resistance of the blue trend channel since my last post hasn't been encouraging:





Still waiting for a breakout in euros, but the blue line looks rock solid.

monthly gold: in the big picture, kind of a modest move for all the hoopla
 I continue to follow the $GOLD:$CRB ratio, which I interpret as a chart of gold's "safe haven" component:


Likewise, silver looks good. The 34- and 55-wk MAs should cross soon, which in the past 10 years has generally been a bullish sign. Also, note the post-2008 lower trend line is about to reach $30.
 ...And with no further ado, here's the evening song and dance I promised in the title of this post, as bait of course, which you may or may not enjoy, depending on your position on the heterosexual-homosexual continuum.








11 comments:

Louis Cypher said...

"depending on your position on the heterosexual-homosexual continuum"

Do we have to choose?

I was very disappointed with the

Jeanne d'Arc said...

Agreed

Louis Cypher said...

Sshhh! this is how rumors get started.

mrttt63 said...

Hi GM

Thank you - always find your charts very useful.

I particularly am interested in the Gold/CRB ratio.

I don't have the facilities but I would be very interested what another composite ratio would look like and what it would tell us.

If one would divide the HUI with the Gold/CRB ratio it should tell us how the HUI is faring relative to the Gold/CRB ratio as the latter tells us that Gold is outpacing the other commodities??

If one does a quick calculation - the resulting composite ratio was highest and therefore best in about April 06. HUI at 401.69 and Gold/CRB ratio of roughly 1.75. This would give us a ratio of 229.5. Then using that ratio to today - with a Gold/CRB ratio of 5 - would result in a HUI of 1147.5 - an increase of 130%.

In addition it seems that composite ratio is actually still in decline and who knows when it will turn and if!!

Thanks - appreciate some comments.

mrttt63 said...

I forgot..

In addition the reasoning constantly used by many that the miners are lagging so horribly is due to the rising costs. But one factor of the cost is shown to be in actual decline and that is the Gold/CRB ratio. The other costs are labor?

Thx

victorthecleaner said...


You need to remember that the major expenditure of the mines is energy. Far before anything else. And energy almost always means diesel fuel (as opposed to electricity, natural gas, ...).

So we should be looking at gold/oil rather than gold/CRB (which includes other resources besides oil).

The following is gold/WTI annually since 1944 and gold/Brent daily since 2002:

http://pbs.twimg.com/media/A3NSpvSCQAER6Jd.gif:large
http://pbs.twimg.com/media/A3NSEVxCcAApghp.gif:large

It is this ratio, gold/oil that needs to be stable for the US dollar to survive internationally, and, no surprise, the US have done a lot (!) in order to stabilize that ratio.

In summary, the mines may enter the history books in the chapter on collateral damage when the world financial system changes away from the dollar.

Victor

victorthecleaner said...


You see from the chart that since WW2, one barrel of crude oil has always been priced between 1/10th and 1/20th of an ounce of gold. It is worth only well below 1/100th of an ounce though.

The difference is the "gold discount" that the U.S. have offered the oil exporters for the service of demanding dollars for their their oil and only converting a small part of their revenue into gold, thereby providing crucial life support for the dollar.

Once the gold/oil ratio increases substantially, there will be no incentive for the oil exporters to use the dollar. The problem is that the Europeans made gold the primary reserve of the Euro when they introduced the Euro in 1999 and stopped supporting the dollar by keeping gold low. Since then, gold has been rising in dollars:

https://pbs.twimg.com/media/A4TGbnwCEAEtbVY.gif:large

In order to keep the gold/oil ratio stable, unfortunately, the oil price has to rise. Indeed, the increase in the oil price started around the same time. The problem is that this is bad for the economy.

Can you guess now why the Keystone XL pipeline was not approved?

Victor

Warren James said...

@Victor, brilliant summary. Thank you. Crystal clear reception :)

Dan D. said...

One point if I may. You noted the cross of the 50 and 200 day movinv agerages or what is commonly referred to as the "golden cross". Note however that while a golden cross "usually" means the longer term trend has reversed, it does not preclude a big correction first. The last time gold saw a golden cross it corrected some 20% before starting a monster of a climb.

I am of the view that we have yet to see the "correction" in precious metals from the September lows. However, my short term "trading" views should never be confused with my longer time frame bullish view.

Warmest regards,
Dan

victorthecleaner said...


The following is the spread between Brent and WTI.

https://pbs.twimg.com/media/A45Yex1CUAIjLBg.gif:large

Note that Brent (specific sort of North Sea oil for delivery in Rotterdam) sets the price for oil at virtually all ports world wide by arbitrage, simply because you can hire a tanker and ship the oil there.

Victor

GM Jenkins said...

Hey mrttt63, Thanks for the kind words. I too wish there was some way to see relationships between ratios. Given all the advanced statistics that makes up a good fraction of these indicators, it shouldn't be so hard for a charting service to offer it. But I have yet to find a platform that allows it.