King Report: Why Gold is Declining

By Bill King - March 12th, 2010, 8:30AM

We received several inquiries about why gold is declining.  Our view is gold is retrenching because:

• UK QE has ended (for now)
• US QE will end in three weeks (for now)
• The ECB did a massive €295B drain (can you imagine the market reaction if Bennie Mae drained $500B in one shot?]
• China is signaling that it wants to rein in inflation by tightening credit, hiking real estate down payments to 50% and allowing the yuan to appreciate
• Europe’s sovereign debt crisis has ebbed (for now)
• Food commodities have broken down
• Gold stocks have greatly underperformed gold since mid-January (gold stocks tend to lead) S&P

S&P 500 Index, Gold and Gold Stocks (GDX) – Gold stocks out-performed gold until late October. Then they traded together until mid-January. Since then gold stocks have under-performed gold.

PERMALINK
Category: Think Tank.

Comments

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “King Report: Why Gold is Declining”

leftback Says:
March 12th, 2010 at 3:10 pm
Sugar in 2010 = Crude in 2008. Gold is next, then silver, copper….
leftback Says:
March 12th, 2010 at 3:27 pm
A nice chart of where we may be in equities. See the long grinding top in 1993. Delightful…!

http://1.bp.blogspot.com/_V7Pddp58Py0/SpFh9f4kQII/AAAAAAAACYM/Yw1xm1cqTsA/s1600-h/nikk+93.png

From “http://www.Garyscommonsense.com” – thanks, Gary!
leftback Says:
March 12th, 2010 at 3:29 pm
Good spot Mr.King – as we all remember, GDX bottomed long before the overall market during 2008-09.
First in, first out. Small cap miners and materials next.
foxmuldar Says:
March 12th, 2010 at 11:19 pm
GLD is looking very bearish today. Price broke below support and the MACD turned bearish. RSI has dropped below 50. Looks like a short now would be worth at least 5 points before it finds support. JMOP

China said today, they will continue to buy treasuries.