From the chart below the weakness in the US gold price looks to be due to US dollar strength so the question in my mind is how long that strength can last. The other question that comes to mind is how high a dollar will the Fed tolerate. Dan Norcini has been keeping an eye on US bond prices and yields which have been rising. The Fed wants to keep yields down and the dollar low to encourage growth in the US economy. The US economy is supposedly stumbling along with some modest growth leading to a dipping unemployment level so a trigger for the Fed is not there at the moment. A growing US economy may be leading to a higher US dollar but when "risk" is on, as it seems to be at the moment, the US dollar usually slides as funds flow out of the traditional safe haven of US bonds. I suspect Ambrose Evans-Pritchard's recent article on global liquidity having peaked and leading to a downturn in the later part of the year may be correct. If a downturn or more problems starts to show up mid year the Fed may act again but the US election coming later in the year may leave them only a small window in which to act.
I'm stupid someone tell me how to read these graphs because intuition and my gut are getting me nowhere! I just cross my fingers and buy the dips!
Got to thinking about the article below, a zerohedge article and armstrong's theory about cycles in public and private debt. Could be the start of the shift away from sovereign debt influencing the dollar? Oversubscribed and picked up nearly twice what they were initially after. http://www.smh.com.au/business/fortescue-eyes-end-of-junk-status-after-debt-sale-20120315-1v4sj.html
Ambrose Evans-Pritchard is warning on the money supply still falling. http://www.telegraph.co.uk/finance/...bal-slump-alert-as-world-money-contracts.html
