Gold Higher, Dollar Lower, Same Same -- But Junior Miners Diverge

By: Jeff Berwick | Wed, Sep 29, 2010
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Another day, another all-time high in gold. What a run it has been for the last two months.

Remember how gold used to act for what seemed like forever? Up until last month gold would usually meander around and then suddenly spike up, or down, $20-$50 in a day. It was extremely volatile.

Well, take a look at the gold chart for the last two months. I'm not sure I've ever seen such a long, steady, grinding higher of any stock, currency or commodity without so much as a $10 move lower at any point in the rise! And now it is just day after day of all-time highs.

Gold

However, as we pointed out in our September 24 blog post, this is actually much more a story of the collapse of the US Dollar than a rise in gold as gold has not made new highs in most other currencies of late.

Look at this chart of the US Dollar Index. It has completely fallen off the rails since June and thanks to Ben Bernanke September was a complete disaster for the US Dollar.

US Dollar Index

Meanwhile, the Toronto Stock Exchange Venture index, which is a good proxy for the small junior mining sector, has been stellar along with the collapse of the Dollar and the subsequent rise in gold. However, notice, just in the last few days its stellar rise appears to have stalled and looks to be about to curve down. Considering that it appears to have stalled while gold has gone on to make new highs may be indicative of a pullback in the junior mining shares ahead. This, by the way, would be completely healthy after the stunning rise in all of our stocks since early August.

CDNX

And so, we'll keep an eye on that divergence. But other than taking some profits on some of our stocks that have made 100-200% moonshot gains in the last 2 months we are not looking to try to time ourselves in and out of the market even if we foresee a small pullback in the junior miners or in gold.

The biggest risk that we see at this time is NOT being in this historic gold move. The last place you want to be at the beginning of a mania is 100% on the sidelines and chasing the train.

In our upcoming October 1st issue of the TDV (available to subscribers - subscribe now for only $15 or $25/month) we will explain in much more detail why we think we are just at the start of what will be a gold mania for the history books.

 


 

Jeff Berwick

Author: Jeff Berwick

Jeff Berwick
Chief Editor
The Dollar Vigilante

Jeff Berwick

Anarcho-Capitalist. Libertarian. Freedom fighter against mankind's two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world's freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.

Jeff's background in the financial markets dates back to his founding of Canada's largest financial website, Stockhouse.com, in 1994. In the late '90s the company expanded worldwide into 8 different countries and had 250 employees and a market capitalization of $240 million USD at the peak of the "tech bubble". To this day more than a million investors use Stockhouse.com for investment information every month.

Jeff was the CEO from 1994 until 2002 when he sold the company and still continued on as a director afterwards until 2007. Afterwards, Berwick went forth to live on and travel the world by sailboat but after one year of sailing his boat sank in a storm off the coast of El Salvador. After being saved clinging to his surfboard with nothing but a pair of surfing shorts left of all his material possessions he decided to "live nowhere" and travel the world as spontaneously as possible with one overarching goal: See and understand the world with his own eyes, not through the lens of the media.

He went on to visit nearly 100 countries over four years and did and saw things that no education could ever teach. He met and spoke with a plethora of amazing people, from self-made billionaires to some of the brightest minds in finance - as well as entrepreneurs from a broad range of backgrounds and locations from tech companies in southern China to resource developers in Mongolia, Thailand, Russia and Chile. He also read everything he could find on how the world really works... politically and financially. A pursuit he continues to this day.

He expatriated, long ago from his country of birth, Canada, and considers himself a citizen of the world. He has lived in numerous locales since including Los Angeles, Hong Kong, Bangkok and currently lives in Acapulco, Mexico and is building a home in Cafayate, Argentina. In essence, everything he writes about here for TDV he has done or is doing.

As well, during his travels, both real and virtual (through the internet), he met some amazing people who have a similar shared vision of what is currently going on in the world and enticed them to come aboard TDV and provide their own brand of analysis.

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