090714 – Trading Down Trend

Model Portfolio: Short Signal (7/31)

Technical Read: With spot gold dropping through the Aug 25CTM140907 closing low, the yellow metal has now formed a downtrend.  I had hoped to get some type of signal change last week (exit short or long) as I want this to be a trading website. I did the “grand slam” analysis this weekend but the current read is still coming up “Short Signal.” I do not expect Thursday’s closing low to hold.

Backdrop:

  • Mario Draghi (ECB president) advised .01 percent point cut in European interest rates and an asset purchase program last week. While the knee jerk reaction might be this act could be bullish for gold prices (i.e. inflationary), in practice this is sending the dollar higher and raising the haunting specter that Euro-Land is losing the war with deflation. Both of these are negative for gold.
  • The pace of manufacturing continued to expand with the ISM index of national factory activity up ticking to 59 in August. The previous month came in at 57.1 , this strength (and its European contrast) should underpin the dollar. Bearish for gold.
  • On this site I am inaugurating a premium service for following US Government long-term interest rates. It follows that asset class in a similar way to the gold signals. I am looking to consult with only one organization at a time. Check the ‘Premium” tab on this site for details. The very first signal, based on Friday’s (9/5/14) close is “Sell Short” on bonds. By the way, this is bearish for gold too.

GH Garrett – Veteran Commodity Watcher for Conquer the Mummy .com

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