Absentee USD & Gold Inverse Correlation


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Absentee USD & Gold Inverse Correlation

-- Published: Tuesday, 6 May 2014 | Print | Disqus

By Ruben Varela, Jr.

Whatever happened to the inverse correlation between the USD and the price of gold? The devaluation of purchasing power should mean more dollars are required to buy each ounce of gold. Thus, with the USD now approaching its lows set in late 2012, gold should conversely be approaching its late 2012 highs, near $1,800/oz.

However, gold is nowhere near $1,800, and since about September, 2013 has instead defied the law of supply and demand by trailing lower in concert with the USD.

Of course, that hasn't stopped commentators from constantly using a higher USD as an excuse to sell gold! Nevertheless, it just goes to show from a fundamental standpoint just how much ground gold is entitled to make up, if not how much patience is required to be long the precious metals sector.

Ruben Varela, Jr. is an independent trader specializing in the Precious Metals sector. email: rtvarela@yahoo.com

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-- Published: Tuesday, 6 May 2014 | E-Mail | Print | Source: GoldSeek.com

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