“….But what’s puzzling you is the nature of my game” – Sympathy For The Devil, Rolling Stones
I’ve been fascinated by the strength in gold and silver lately, especially as they relate to the US Dollar. Today the dollar spiked higher on world political news and economic news, and yet gold and silver kept a bid under them.
It makes sense but it also means that sooner or later, something’s got to give. Safety is being sought in all three assets right now, as the Euro is unstable, Asia is suddenly unstable, and there’s no place to hide but the precious metals and the dollar.
I am now using 1,330 on the /GC futures contract as my mental stop, which is still far below even this month’s pivot point. We could bust right through that at any time, or keep right on trucking – who knows?
Common sense says that continued currency wars and potential real wars will support only one thing – and that is sustained high demand for gold and silver. In fact, there are some manufacturers and users of silver now unable to purchase due to unavailability of material.
The basics are still intact, but as Verbal Kint explained in The Usual Suspects regarding Kaiser Soze, “the greatest trick the Devil ever pulled was convincing the world he didn’t exist.”
It’s why I am watching the dollar first, and bonds second. We’ll know soon enough whether a change in character is upon us in gold and silver.
Trade the extremes!