LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

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

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

GoldSeek.com to Launch New Website
By: GoldSeek.com

Is Gold Price Action Warning Of Imminent Monetary Collapse Part 2?
By: Hubert Moolman

Gold and Silver Are Just Getting Started
By: Frank Holmes, US Funds

Silver Makes High Wave Candle at Target – Here’s What to Expect…
By: Clive Maund

Gold Blows Through Upside Resistance - The Chase Is On
By: Avi Gilburt

U.S. Mint To Reduce Gold & Silver Eagle Production Over The Next 12-18 Months
By: Steve St. Angelo, SRSrocco Report

Gold's sharp rise throws Financial Times into an erroneous sulk
By: Chris Powell, GATA

Precious Metals Update Video: Gold's unusual strength
By: Ira Epstein

Asian Metals Market Update: July-29-2020
By: Chintan Karnani, Insignia Consultants

Gold's rise is a 'mystery' because journalism always fails to pursue it
By: Chris Powell, GATA

 
Search

GoldSeek Web

 
It's All About That Yen


 -- Published: Tuesday, 31 March 2015 | Print  | Disqus 

By Craig Hemke

As the first quarter of 2015 draws to a close, let's take inventory of where we stand and then let's see if we notice anything interesting.

Not really sure where to start so, as MrsF likes to say, we'll take things "in no random order":

                         12/31/14 close                Last                  YTD% change

GOLD                   $1184                           $1188              +0.34%

SILVER                 $15.60                         $16.76              +7.44%

CRUDE                  $53.27                         $48.42              -9.10%

LONG BOND           2.75%                          2.55%               +7.27%

10-YEAR NOTE       2.17%                          1.95%               +10.14%

POSX                    90.27                           98.51               +9.13%

EURO                    1.2096                         1.0737             -11.24%

YEN                      0.8345                         0.8329              -0.19%

S&P 500                 2058.90                       2079.75            +1.01%

OK, I admit it. I tricked you. Those numbers are not in "no random order". Instead, notice the three items where I've bolded the % return numbers. Hmmm. No why would I do that? Could it be this be another exercise where Turd explains how the algos run everything?

YES! It's exactly that!

As has been documented here ad nauseam, the price of gold is now largely determined solely by fluctuations in the yen. The yen goes down, gold goes down. The yen goes up, gold goes up. Put more specifically...the dominating computer-driven algo trade is long the USDJPY and short gold. The easiest way to show this is by inverting the USDJPY chart and plotting it overlaid with gold. When you do this, you get the chart below...and it's a fair chart with the vertical axes nearly identical in % change:

On a much larger scale, The Banks and hedge funds are also running a paired trade of the yen and the S&P. The chart below shows the USDJPY directly overlaid with the S&P 500. Again, it's a fair chart as the changes in the vertical axes is nearly identical:

So, if you're baffled why "fundamentals don't seem to matter", it's because the fundamentals don't matter. There are very few human traders of size left and the computers control everything. In this environment, arcane notions such as supply/demand and company fundamentals are insignificant. The primary driver to these "markets" are changes to the USDJPY. Control that and you control everything else. With this in mind, is it any wonder why The Fed...hell-bent on driving the US stock market as high as possible to enhance the "wealth effect"...continues to give impetus to the dollar bid by jawboning about higher rates? If you and I can figure this out, you know that Mother Fellen and her Goons have figured it out, too. Talk the dollar higher and let The Machines do the rest. And lest you think that this is just a temporary phenomenon, feast your eyes on the 3-year charts below. Yen--gold on the left and yen--SP on the right:

   Larger chart.

Of course, like anything else, this "strategy" will work until it doesn't. Just as one day, whether through a Black Swan event or just a snowballing global liquidation, equity fundamentals will re-assert themselves...one day, too, the paper gold market will be driven low enough that the suppliers of physical metal will be unable to clear all of their trades. This exact situation nearly broke the "market" for gold in early November of last year. London GOFO rates plunged to record low levels and, as you can see on the chart below, it was the one time where the yen--gold trading pair failed:

Though this trade has since re-asserted itself, it's no accident or coincidence that the paper gold "market" once again found a bottom two weeks ago near $1150. In the end, anyone worried about a renewed drop in gold should only be concerned with two things:

  1. Can the Bullion Banks find a steady supply of readily-deliberable physical gold at prices below $1150? Back in November, they could not and the physical market drove a rebound in the paper price.
  2. Is the yen going to make even deeper lows? As you can see on the long-term USDJPY chart below, the area just north of 120 is pretty stout resistance and without the yen making new lows, there's no impetus for The Machines to further sell gold.

So, the next time you read the doom-and-gloom predictions of some chart-reader or snake-oil salesman, please simply ignore them. Until the current system breaks, price will continue to be determined solely by changes in the USDJPY and the availability of physical gold to clear trades. At present, nothing else matters.

TF

http://www.tfmetalsreport.com/

 


| Digg This Article
 -- Published: Tuesday, 31 March 2015 | 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 - 2019



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


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC 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, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.