m22au's journal

Long-time readers of this journal will know that my main long-term position is a pair of (long gold + short S&P 500), with the view that the debt problem, not just in the US, but in many developed countries, has not yet been resolved properly.

The pair hit a noticeable peak in August 2011, when there were significant concerns about (1) Europe and (2) US debt ceiling.

Since then, the pair has done poorly, declining to levels last seen in April 2011.

Before today (Thursday 17 January 2013) I haven't paid much attention to the story about Germany repatriating some of its physical gold holdings.

However this morning I noticed that gold quickly rebounded from the declines induced by the decline in the weekly jobless claims number.

It made up all of those losses, and then broke out above multi-day resistance of 1685.

The articles about Germany repatriating its gold make for interesting reading, but ultimately they can be summed up by a tweet from Bill Gross:

http://www.zerohedge.com/news/2013-01-15/bill-gross-gets-it
https://twitter.com/PIMCO/status/291211759207985153
"Gross: Report claims Germany moving gold from NY/Paris back to Frankfurt. Central banks don’t trust each other?— PIMCO (@PIMCO)"

Links:

Germany
http://www.zerohedge.com/news/2013-...sbank-commence-repatriating-gold-new-york-fed

Netherlands
http://www.zerohedge.com/news/2013-...triation-train-first-germany-next-netherlands

Goldcore (biased obviously, but still relevant)
http://www.zerohedge.com/news/2013-01-17/germanys-gold-repatriation-unlikely-assuage-public-concerns

Next resistance:

1690.50 is the high from January 3, the date when the minutes of the December Fed meeting were released.

1695.40 is the high from January 2, the day when risk assets went up by a lot on the fiscal cliff news.
 
Quote from Daal:

My impression was that the gold pop had more to do with the philly fed being weaker than expected
More...

Yes of course, I should have been clearer with my discussion above.

I did not mean to say that the German repatriation news is the only reason (or even a reason) for gold's strength this week.

Rather, it is an interesting indication that over time, people are questioning the validity of paper currencies that can be created in limitless quantities. This is bullish for gold.

Furthermore, the ability to recover from the weekly jobless claims number losses, and break above 1685 indicates technical strength.
 
Quote from m22au:


It made up all of those losses, and then broke out above multi-day resistance of 1685.

Next resistance:

1690.50 is the high from January 3, the date when the minutes of the December Fed meeting were released.

1695.40 is the high from January 2, the day when risk assets went up by a lot on the fiscal cliff news.
More...

Update:

Broke out above the 1690 level, and in less than 4 minutes went as high as 1697.80.
 
http://www.zerohedge.com/news/2013-02-11/goodbye-bond-vigilantes-hello-brent-vigilantes

"Goodbye Bond Vigilantes, Hello Brent Vigilantes"

Brent oil above $120 could start to make things difficult for equities, and in particular, transport stocks.

Transport stocks are the clichéd "canary in the coal mine" with regards to how the entire stockmarket will react to higher oil prices.

If and when transports (eg airlines) start underperforming the entire stockmarket on a multi-week basis, then it's likely higher oil prices are hurting.

IYT (transport ETF) looks fine for now.

$XAL and FAA (airlines index and airlines ETF) look a little less strong, and may have reached a multi-week double-top. Time will tell if this is just consolidation before a move higher or an oil-induced peak.
 
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