Good news just keeps rolling in. Aircraft carrier Enterprise off on summer cruise to Middle East. Horton has collapsing home sales. S&P and Moody's analysts awake from naps to reconsider ratings on some CDOs. Ten year rate of inflation in U.S. at highest level since 2002. Oil prices moving up. Radical Islamic groups in effort to take control of Pakistan, and its nukes. Israeli general warns time may be running out on halting Iranian nuclear weapon program. Euro climbs atop dollar while British pound at 25+ year high against dollar. Why would anyone want to own Gold in such an environment?
Blue line in graph is Median U.S. $ Index. U.S. dollar is trading at a new cycle low, as predicted here. Most meaningful national monies have been moving higher against dollar. One money has not followed move to a high versus U.S. dollar, and is currently mispriced. Red line is Gold price of a U.S. dollar, using right axis. Like any currency, one(1) divided by dollar price of Gold gives price of dollar in that ounces of Gold. Lower Gold price of a dollar, higher the dollar price of Gold. Price of Gold has not reflected deteriorating valuation of dollar. That divergence shown in graph, between red line and blue line, suggests Gold is under priced, and providing an opportunity for investors. A move to $700+ would seem to be in the process of developing, but of course not in a straight line. Those that have been selling Gold are about to learn the error of their ways.
GOLD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report, monthly, and Trading Thoughts, weekly. For a subscription go to http://home.att.net/~nwschmidt/Order_Gold_EMonthlyTT.html. Ned will be exploring the Gold Super Cycle at The Wealth Expo in NYC, 19-21 October. For information go to www.wealthexpo.net. To receive copy of July issue of The Agri-Food Value View, an exploration of Agri-Food Super Cycle. write firstname.lastname@example.org.