In his latest piece, Peter Degraaf analyzes the question if gold and the US dollar can rise in tandem. He calculates that it is now 78 weeks ago since the gold price reached a new all-time high. He compares it with the correction of 2006 which took 71 weeks, and the correction in 2008 which took 77 weeks. A simultaneous rise of gold and the US dollar could be imminent.
In his article, he shows 13 different charts which are characterized by extreme and mostly historical readings, including:
- The US Federal Debt has risen to all-time highs.
- Money managers hold historically low long positions vs historically high short positions.
- Large funds hold multi-year low GLD positions compared to their total assets.
- The gold price standard deviation sits at record lows (a buy signal from a contrarian point of view).
- Central Bank gold buying recently reached a 48-year high.
Peter Degraaf writes that all currencies, once decoupled from gold backing, eventually became worthless. There are no exceptions. The Bank of Canada has since 1980 sold 98% of its gold holdings and ‘invested’ the proceeds in U.S. dollar denominated bills and bonds, which are not backed by gold.
The full article is available for download and is a must-read to put the downward gold price pressure into perspective.
Peter Degraaf is an online stocks and bullion investor with over 50 years of investing experience. He produces a daily market letter for his many subscribers. For a sample copy drop him a line at firstname.lastname@example.org or visit his website www.pdegraaf.com.