This latest correction, more than any I can remember, has the experts scratching their heads.
-When an upward or downward spike in the market .....proceeds sans logical underpinnings,
- a snap-back rally or correction...... often follows.
The last such incident in the gold market occurred in 2008.
- The market sold-off roughly 30% at the height of the financial crisis,
- and then..... regained and .....superseded those losses
- before 90-days had elapsed.
(From there the market climbed to all time highs in 2009.)
First,
reserve bank credit has gone vertical since November’s near-term bottom — up over 15%. The Fed might reverse or moderate its purchases at some point in the future, but at the moment, it has the pedal to the metal. While Ben Bernanke couches his rhetoric and keeps the markets guessing, he quietly – in reality — engages the Fed in what could be a new round of quantitative easing.
- In short,
the markets should be paying attention to what the Fed does, not ....what it says.
Second,
- the gold price, as a result of its recent plunge,
- has crossed decisively under the reserve bank credit trend line.
The two developments together have made for
- an interesting chart divergence
- the sort of thing that catches the attention of technicians and.... value investors alike,
- particularly....... if it defies logical explanation.
http://www.usagold.com/cpmforum/2013/06/11/the-connection-between-quantitative-easing-and-the-gold-price-3/