Gold making another strong push toward the $1360 barrier
Gold is making another strong push toward the $1360 barrier this morning trading at $1353 and up $6.50 on the day. Similarly, silver is displaying strength – up 31¢ and over the $17 barrier at $17.09. Gold has made a number of attempts to break through the $1360 mark and it will be interesting to see whether or not this push will be the one that carries it through. Gold and silver’s upside appears to be part of a larger move in the commodities complex this morning led by oil – up over a $1 at $72.70 as this written. Some experts believe oil could push through the $100 per barrel level over the next several months the result of a supply-cutting deal among OPEC members led by Saudi Arabia.
Chart of the Day
Chart note 1: With the US dollar the centerpiece of interest the past few weeks, we thought it appropriate to post the long-term overlay chart of the gold price and the major-currency version of the US Dollar index. As you can see, the dollar has been in a secular, long-term decline against other major currencies since the early 1970s when the U.S. abandoned gold-backing for the currency and the world switched to free-floating gold and currency prices. Despite all the talk of a strong dollar and how Treasury secretaries historically back the concept, the reality is the opposite – a weak dollar when measured against its major competitors. In the end, unencumbered ownership of physical gold coins and bullion, as this chart amply illustrates, has proven to be a very effective defense in the on-going process.
Chart note 2: The declining tops and bottoms indicate long-term erosion in the value of the dollar and give credence to the argument in financial circles that we may be in the beginning stages of another major downturn similar to those launched in 1985 and 2002. The 2002 event corresponded with the launch of gold’s secular bull market.