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Confidence Review - Gold

Published 09/02/2019, 03:29 AM
Updated 07/09/2023, 06:31 AM
XAU/USD
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DX
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GC
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The old American idiom of a day late and dollar short is an phrase easily applied to majority's ability to time (buy or sell) U.S. stocks. The majority, influenced more by instinctual behavioral tendency of the individual to seek acceptance of an emotionally-driven crowd than act independently in the minority, views rising and falling stocks prices as bullish and bearish. This tendency that drives them chase when probabilities favor fading relegates the majority as the consistent bagholders of history's panics and trend changes.

If your senses are telling you that something is wrong in the world, growing unrest in within all levels of society, it's definitely playing out in intermarket relationships. Gold and U.S. dollar generally trade in opposite directions. That is, until confidence falters and capital flows from the periphery economies to core (U.S. dollar). The dollar rallies, but so does gold as uncertainty rises and confidence falters. At first the fall in confidence is slow, but the deterioration follows a non-linear path. The computer recognizes something is wrong when gold and the US dollar start trading the same direction.

US Dollar Index Weekly Chart (UUP W)

Gold vs Dollar Trading Correlation

Latest comments

The value of the US dollar is defined as 1/xth of an ounce of gold. The value of the dollar index is defined relative to all other currencies. They are not the same! If all currencies are devaluing faster than the DX relative to gold you can still have a rising USD gold price and a rising DX.
To be candid, I can't believe this can ever happen, so so surprised. Indeed the faltering followed a non linear path.
It started behavior like this a few months ago. Strange, isn`t it?
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