Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Against Foreign Currencies Update

Commodities / Gold and Silver 2016 Aug 13, 2016 - 12:51 PM GMT

By: Jordan_Roy_Byrne

Commodities

It is the dog days of summer. The metals are trading below their recent highs while the miners continue to be on the cusp of their next leg higher. In any event we remain bullish as we expect the next big move to be higher not lower. One reason, among many is Gold remains strong against foreign currencies and that often is a leading indicator for the sector at large. This is something we track often and we wanted to provide an update during the slowest period of the year.


In the chart below we plot Gold against foreign currencies and Gold in normal, US$ terms. To be clear Gold against foreign currencies (Gold/FC) is Gold against the currency basket that comprises the US$ index. Since the new millennium Gold/FC has been an excellent leading indicator for the sector. Note that Gold/FC has made new highs ahead of Gold and made positive divergences before the three most important lows of the past 16 years (2016, 2008, 2001). In fact, the action from 2014-2015 shows strong similarities to 1999-2000. Moreover, note that at its peak a few weeks ago, Gold/FC was within 8% of its all time high. That is the equivalent of nearly $1750/oz in US$ terms.

Gold, Gold vs. Foreign Currencies

In the next chart we look at different iterations of Gold against foreign currencies. The top plot is the same version shown above while the middle plot shows Gold against the US$ trade weighted basket. The bottom plot shows Gold against emerging market currencies. In every case Gold remains firmly in bull market territory and stronger than Gold in US$’s.

Gold vs. Foreign Currencies

Tracking Gold’s performance against foreign currencies is essential as we can glean quite a bit more information about what is really going on in the market. Many newsletters purporting to be analysts fear monger over the stability of the US$ as a reason for people to buy Gold. However, note that the US$ index is essentially flat compared to 10 and 20 years ago while Gold denominated in any and every currency is much higher.

In other words, if Gold is going up only because of a falling US$, that is a US$ bear market, not a Gold bull market. A Gold bull market is Gold rising against the majority of currencies. In the same vein, a Gold bear market is Gold falling against the majority of currencies. The charts show that actually ended well before the final low at the end of 2015.

On the mining side, most Gold and Silver comes from outside of the USA and many (but not all) companies are exposed to foreign or local currencies and not the US Dollar. Many companies in Canada and Australia bottomed a full year ahead of the sector because the Gold price in those currencies was very strong (even though Gold in US$ had yet to bottom).

Summing it up, Gold’s strength in foreign currencies confirms its global bull market status and provides a hint that more gains for Gold in US$ terms are likely ahead. We view any weakness in the weeks ahead as a buying opportunity.

For professional guidance in riding the uptrend in Gold, consider learning more about our premium service including our favorite junior miners which we expect to outperform in the second half of 2016.

Good Luck!

Email: Jordan@TheDailyGold.com
Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT  is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2014 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor.  Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in