QUESTION: It seems as though the rally in gold is short covering? If it is, and all bottoms start that way, why is this not the bottom?
Always read your work with great interest.
Yours truly,
JB
ANSWER: Major lows are always short-cover rallies, but they are much more dramatic. Here we had gold struggling to rally as it made a dead cat bounce when oil was making new lows. That showed the cycle was indeed higher, but gold was flat while oil was crashing. What moves sideways during an up cycle and what will not rally moves lower with more gusto when the cycle turns back down. In this case, gold held and finally began to exceed the reversals only when the other commodities in the sector completed their cycles. Gold had to wait.
PRICE is entirely separate from TIME. We have been warning for years that we should see a dollar rally that may even exceed the 1985 high. The yuan made the 19 year low in 2013 and last year we had an outside reversal to the upside, showing that the dollar was indeed in an uptrend. The crack in the euro, the pound, and the C$ have combined to confirm that forecast of the trend.
So what we need to complete here is the dollar rally. There is about $9 trillion in dollar short positions from emerging markets. Clients around the world have been calling us in for consultations, as usual, since the number one creator of havoc is currency. More than 75% of corporate losses have to do with currency.
We have not yet felt the pain needed to create the major global shifts for the future. The TIME is not right. It appears to be the second benchmark. If you look at these markets from a connected basis, it becomes easier to see the trend. Our forecast for a dollar rally is critical to the outcome as a whole and we are seeing the subtle pressure building, as with China’s devaluation. A dollar rally will create global chaos and that is the key to political change. If you are familiar with charts, our Dollar Index back to 1900 shows that the dollar is still alive and well with a new spike high being within the realm of possibility.
