Gold the Euro and the Dollar
There are many fundamentals that drive the gold price, fear of Governments, fear of inflation an out of control money supply, fractured political systems and a central banking cartel devoid of any real understanding that what they do does not work never has and never will.
Central banks and politicians are hostages to fortune they are not the masters of the universe and have little ability to forecast events or to control outcomes. That so many listen to their every word is quite shocking in view of their complete ineptitude note the Governor of the Bank of England threatening to raise rates should the UK public dare to vote against the staus quo and then when the pound is at thirty year lows he slashes rates instead. Can anyone take this instiution seriously?
We believe that a significant part of gold’s rise at the turn of this century was in part due to the threat that the Euro represented to the Dollar as the global reserve currency, it wasn’t that long ago that everyone was singing the praises of the 500 euro note and the dollar was going to the dogs. Whilst the Euro out performed the Dollar gold also rose, however since then the Euro has sunk and so has gold.
From a macro perspective there is not a lot to be bullish about in the Euro area, more bailouts will A glaring structural and financial imbalance needs to be resolved, but politics prevents sensible measures from being taken. On the other hand the US looks to be in far better shape on a relative basis, the least dirty shirt in the laundry basket.
Gold looks as though it is about to form a top over the coming weeks, having risen so far since the start of the year it is due a pullback which should last until the first quarter of 2017, in our opinion this should be a healthy correction with a great buying opportunity to come.
Our patterns show a protracted topping over the next month or so with the possibility of a further high for the year before we decline.
Below is our current EURUSD forecast, which shows little sign of an upsurge in the Euro at this stage, infact if anything it shows the possibility of much more weakness, we also have long term forecasts for the Dollar Index and there isn’t much sign of Euro strength there either.
Now there is always the possibility that gold and the Dollar could rise in tandem this would represent a significant event, first this would see gold rise extremely quickly in Dollar terms but even faster in most if not all non dollar currencies, the definition of the re emergence of the gold bull market from the early part of this century but with a significant bang.
However for now we will stick with our macro perspective that a much weaker Euro and a strong Dollar reduces the need for gold to act as a safe haven, so as a result we believe that gold will decline along with the Euro relative to the Dollar for a period, but ultimately gold will begin to dominate all currencies and enter a new bull market precisely because this is what central bankers get when they fail to understand that they are not the solution but they are the problem.
We remain long term gold bulls and our longer term forecast patterns give us the confidence to not worry about any decline that may come first, it would represent a significant buying opportunity and a bigger base for an even bigger price rise in the future.
Taking patterns in nature that repeat over different time frames like fractals as the basis for the forecast methodology, our forecast patterns can last for months and years, we create a most probable long term fractal pattern and then continually test it and model it over multiple time frames to ensure the pattern remains a probable event.