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For months gold has bided its time, building a stronger and stronger base that, frankly, bad analysts refuse to see. Gold is trapped between falling dollar liquidity and rising distrust of government institutions to contain the chaos.
All of the correlations between gold and interest rates, money supply figures and the rest only function within the parameters of a market convinced of future political stability. Once that future stability begins getting deep discounts by markets and those relationships falter, gold consolidates, bides its time and then pops spectacularly.
It’s pretty simple. U.S. bonds and U.S. stocks have preferentially seen safe haveninflows as traders look for yield in a world of exploding negative yielding debt.
So now, with more than $10 trillion in debt yielding less than gold’s zero percent is it any wonder we’re seeing a move into gold?
This is the gold’s big grievance it has with central bankers. They have tried to maintain confidence for so long by suppressing interest rates and injecting liquidity that doesn’t circulate that its creating the mother of all bases from which gold will break out of soon.