Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Closing Report: Gold and Silver Gain About 1%
By: Chris Mullen, Gold Seeker Report

Northern Vertex Files Preliminary Economic Assessment Report for the Moss Gold Mine in NW Arizona
By: Northern Vertex Mining Corp.

Does The CoT Structure Prohibit A Rally?
By: Craig Hemke

Harry Dent’s Gold Prediction Invalidated
By: Przemyslaw Radomski, CFA

SELLING OUT OF PRECIOUS METALS AND BUYING BITCOIN…. Very Bad Idea
By: Steve St. Angelo

The Bitcoin Bubble Explained in 4 Charts
By: Jake Weber

VXX Sends an Awesome Message from Another Galaxy
By: Rick Ackerman

Geopolitical Risk Highest “In Four Decades” – Gold Demand in Germany and Globally to Remain Robust
By: GoldCore

Asian Metals Market Update: November-22-2017
By: Chintan Karnani, Insignia Consultants

Gold Seeker Closing Report: Gold and Silver Gain With Stocks
By: Chris Mullen, Gold Seeker Report

 
Search

GoldSeek Web

 
Even More On The Gold-Yen Link


 -- Published: Friday, 14 November 2014 | Print  | Disqus 

By Turd Ferguson

As other outlets catch on to the gold--yen link, I thought we might discuss it a bit more today.

First of all, my apologies for sounding like a broken record. It is not my intention to beat this topic to death on a daily basis. However and for now, IT IS WHAT IT IS and we have to deal with it. Additionally, I am convinced that this persistent correlation might hold the key to finally stressing the paper---physical connection. GOFO rates in London fell even further in London today, making new 15-year lows in the process. This is always a sign of physical delivery stress and, to me, indicates that The Bullion Banks are having extreme difficulty sourcing metal to deliver at these noneconomically-derived paper prices.

And it continues to appear that we are seeing this stress play out in real time on the price charts. Notice that since last Friday, the paper price of gold has broken cleanly above the JPYUSD. It hasn't yet drawn completely way but it hasn't fallen back into complete overlap, either.

Apparently we're not the only ones who have noticed this, though I must say that it surprises me that so few have caught on. ZeroHedge wrote up a summary last night where they laid the correlation at the feet of the BoJ: http://www.zerohedge.com/news/2014-11-12/did-boj-quietly-peg-yen-gold

I don't agree with their conclusion as it grossly overstates the size and complexity of the Comex paper gold market. What I mean is...It doesn't take a formal central bank peg to link gold to the yen. Remember, "prices" are set on the Comex by just a small handful of HFT algo hedge funds trading against an even smaller number of bullion bank desks. If the majority of these computer-driven funds are programmed to sell gold with every downtick, gold is going to follow the yen. Period. No central bank intervention is needed.

And you've heard me state that although this gold-yen correlation came into prominence in 2008, it only really got sickeningly tight in June of this year. Want more proof of that? Then check out the next two charts...

First, here's three years of a similar linkage that I've discussed often in the past...the rational and economic link between gold and The Long Bond. Again, why is this rational? Lower interest rates make gold, which "doesn't pay interest and is a useless relic" more attractive. Note the clear correlation until...you guessed it, June of this year:

Now look at three years of the yen-gold link. Notice the same loose correlation until June 2014 and then, WHAM! Ever since they are perfectly 1:1.

So, why did this happen? What changed in June to prompt this break of the gold-LB and accelration of the gold-yen? Who can say for sure? Maybe ZH is right and the BoJ started running an operation in June in anticipation of the increase in QE announce two weeks ago. Maybe. All I know is that it clearly is what it is and until the paper---physical link causes the correlation to break, we will likely see gold move even lower as the yen moves lower.

To that end, read this. More from SocGen's Albert Edwards. This time, instead of forecasting the USDJPY rising to 120, he's now saying 145! YIKES!! If the gold-yen correlation doesn't break before then, what would gold be at yen 145? $900? $700?? http://www.zerohedge.com/news/2014-11-13/most-important-chart-investors-updated-edwards-sees-usdjpy-145-next-and-tidal-wave-d

Again, I don't think this will happen for two, primary reasons:

  1. The physical market will break from the paper price well before $700 gold.
  2. The Fed has to understand that global disaster that a 145 yen and an 80¢ euro would bring. I simply cannot imagine that they wouldn't act to malign the dollar if the POSX begins to even exceed 90, much less 100 or 110.

So, anyway, all of this is pretty crazy stuff but it's what we get since we've allowed all global markets to become such computer-driven shams.

I need to mention crude for a moment. We discussed in yesterday's podcast that the chart looked lousy and it appeared that another breakdown was coming. Well, we didn't have to wait long. Hot on the heels of another Saudi pronouncement (covert Russian sanction scheme), the price fell to new lows for this move at $75.43 and I have a last of $75.70. Though $75 can and will offer some support, I still think that the greazy stuff is headed to $70. So far, today's move has not dragged silver lower and this could be a growing sign of physical silver tightness...just like what we're seeing in the gold-yen growing divergence. We'll need to watch this closely, too.

Finally, here are some two-hour charts of the metals, for what they're worth...

That's all for now as I need to get ready for A2A within the hour. As usual, I'll post a recorded copy of the presentation shortly after it concludes.

Have a great day,

TF

http://www.tfmetalsreport.com/


| Digg This Article
 -- Published: Friday, 14 November 2014 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.