The fact that gold has held $1200 (roughly) as the dollar index rallied from 87 to 100 has many commentators scratching their heads. At the same time. they wonder, gold has not mounted any sort of a rally either. What's going on?
Well, gold is not going to rally right now because the dollar index is going to go a lot higher.
Why?
Not because the US is so strong. In fact, even with the myriad computational machinations of the various US bureaus of Statistics, the US economy as barely "growing" at sub 2 percent 6 years into a supposed "recovery."
Nobody really believes in this recovery. But many are paid handsomely to support this myth in order to hopefully pry loose all those "retail dollars sitting on the sidelines," so they do.
But the Euro is falling apart. It's not jut Greece. Spain, Portugal, Italy and France are not far behind. And the yen is dead currency walking.
So the dollar has to rally. And while it does, Gold will continue to tread water.
Why?
Because gold is a measure of Financial Stability and nobody really believes in the recovery story.
Yet people are still hoping. Hoping against hope.
But when the US economy goes so demonstrably negative in growth that not even statistical magic can produce a plus one tenth of one percent number, people will lose hope.
And then gold will rally.
How high?
Very high.
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