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Central Bankers, The U.S. Dollar and The Inverse Relationship with Gold


There are a myriad of factors that need to be taken into consideration before one can determine the direction of a particular market sector and therefore place a trade. Supply and demand is a popular one when considering the fundamental analysis as are the moving averages when considering technical analysis. Rightly or wrongly we consider the inverse relationship between the US Dollar and Gold to be very important and along with the words and actions of the central bankers.

On Wednesday the 28th November 2018 we saw action in the markets that clearly displayed the relationship of these three factors.

Charts of the USD and Gold

Taking a quick look at the chart of the US Dollar we can see it fell sharply on Jay Powell’s words.


The Gold chart shows the inverse reaction to the dollar as it bounced on the dollars demise.




Dollar Libor Jumps To Fresh 10 Year High, Adding To Funding Headwinds

It may be the bete noir of the credit market, but despite the gradual phase out of the infamous manipulated benchmark, Libor remains the reference rate for trillions in floating rate debt instruments,

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The S&P500 Fall and Its Effect On The Precious Metals Sector


Market sectors are interlinked and what boosts one particular sector can put downward pressure on other sectors. We have seen the recent action by the Fed in raising rates and the boosting effect that they have on the US Dollar. A strengthening dollar has an inverse effect on gold and silver and the associated precious metals producers and so gold bugs have suffered accordingly.

The action in the financial markets of the last few days has seen a correction from historic highs as investors decided to take profits and place their investment funds elsewhere. During Thursday’s trading session on the NYSE the DOW Jones was down 545 points, following an earlier fall of some 800 points. The S&P500 also fell in a similar fashion and both indices closed below their respective 200day moving averages.

It should also be noted that the dollar also lost ground despite the recent rate hikes and the stated intention of the Fed to continue with the policy of rate ‘normalization.’ Both of these factors helped gold and silver prices to recover and this in turn saw investors taking a tad more interest in the associated mining companies. The biggest gold producer on the planet, Barrick Gold Corp (ABX) gained 9.39% in Thursdays trading session. In stock market parlance it is unusual for an elephant to sprint but on this occasion, Barrick proved to be the exception to the rule.

The Chart of the S&P500



The above chart of the SPX clearly depicts.......



Last week was a really interesting week for gold - was it a minor jump or the start of a new rally?

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Randgold And Barrick To Merge In $18BN Deal, Creating World's Largest Gold Miner

As gold prices cling stubbornly to the lowest levels in a year as US stocks continue their record-breaking tear, two of the world's biggest gold miners are sensing an opportunity. As the Financial Times reports, Canada’s Barrick Gold (the world's largest miner) is preparing to merge with Randgold Resources (its UK-listed rival) in an all-share deal that will create the world's biggest gold miner, with an $18 billion valuation and a dominant mining position in Africa.

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A Mini Bounce in the Gold Bugs Index HUI

The inverse correlation between gold and the dollar was alive and well today as the dollar dropped below the critical level of 95 and gold bounced up to $1210/Oz.

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Multi-Billionaire Hugo Salinas Price – I’ve Seen Many Terrible Financial Collapses In My 86 Years But What Is Coming Will Be Very Nasty

Hugo Salinas Price

As trading continues during Fed week, today Multi-billionaire Hugo Salinas Price warned he’s seen many terrible financial collapses in his 86 years but what is coming will be very nasty.

After 86 Years On This Earth, This Is What I Learned

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Gold Mining Stocks Still in Weak Hands (Part Three)


On days like this I feel like a script writer for a soap opera:

“Previously on Desperate Investors………..” you get my drift as we recently wrote:

This is a capitulation of sorts, but it may not be final at this point. The selling of this sector creates more selling as the stops are hit on the way down. Investors lose heart and decide to end the pain and make no mistake this is painful

There is blood in the streets but I’m not sure that this particular bloodbath is over just yet.

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A Gold Bloc For Iran, Russia, And Turkey...Oh My!

How will Iran, Russia, and Turkey react to the plethora of financial sanctions being placed on them by the United States?  Well, they will do what anyone being beaten with a stick would do: they will try to escape.

An escape is always

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"Inflation Will Run Amok", DiMartino Booth Says "Gold Is The Ultimate Hiding Place"

Danielle DiMartino Booth

Former Fed insider Danielle DiMartino Booth is sure the Fed is going to raise interest rates again at the September meeting.

Why? DiMartino Booth explains, “I think he’s (Jerome Powell) the most independent Fed Chair in the past 30 years, and I think he’s going to raise rates regardless of what is happening in politics..."

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Greyerz – The Price Of Gold Is About To Skyrocket As We Enter The “Dark Years

As the world edges closer to the next crisis, today the man who has become legendary for his predictions on QE and historic moves in currencies, told King World News that the price of gold is about to skyrocket as we enter the “Dark Years.”

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