A Bullish Gold vs High Inflation.

[YEW_Trade]

Gold has been a good hedge against inflation and inflation is now at 6.2%. 
It’s time for gold to shine. 

[Broxer93]

Ahhh you'll get so disappointed 😀

[MongiIG]

On 11/12/2021 at 20:32, YEW_Trade said:

Gold has been a good hedge against inflation and inflation is now at 6.2%. 
It’s time for gold to shine. 

Hi @YEW_Trade

Thanks for sharing your analysis on Gold.

GOLD PRICE ANALYSIS:

As talks of inflation remain at the forefront of risk sentiment, a break above trendline resistance on the weekly time-frame has lifted gold prices above the 61.8% Fibonacci retracement level of $1,851, currently holding at support.

While the CCI (commodity channel index) remains within range (at least for now), inflationary pressures may continue to support the upward trajectory for the short-term move.

GOLD WEEKLY CHART

Chart prepared by Tammy Da Costa using TradingView

Meanwhile, with the release of both the November inflation data and the December Michigan sentiment report, Gold prices have remained supported at around $1,785, the 38.2% Fibonacci retracement of the 2021 move.

For the week ahead, traders will likely remain focused on the upcoming FOMC meeting for signs of additional tapering which could further assist in the catalyzation of Gold and Silver prices.

GOLD DAILY CHART

Chart prepared by Tammy Da Costa using TradingView

 

Written by Tammy Da Costa, Analyst for DailyFX.com

 

All the best - MongiIG

[MongiIG]

10 minutes ago, Broxer93 said:

Ahhh you'll get so disappointed 😀

Hi @Broxer93

What is your view and analysis for gold ? Also gold price forecast eyes FOMC what is your view on that?

 

All the best - MongiIG

[Broxer93]

Gold is getting demonetized.

What should have been the hedge for inflation has not ultimately been such in the greatest inflationary period we've had since 1920. 

Gold is manly held by Governments. Also, is an asset that you hold on "paper", without actually owning it. Gold is slow, it takes great force to defend, and you cannot hold physically, even if you wanted, more than a certain quantity. Which makes it obsolete.

No big company with future market is buying gold. Not even those who mine gold want to hold on to it. 

Gold forecast? Gold will be depriced until meets its real value. A great metal. Better than silver, but not more than that. Hence why I am short since 2020. And further shorted every time it moved up. Ended up being right every single time. Time will tell us if I am correct or just a fraud.

[MongiIG]

3 hours ago, Broxer93 said:

Gold is getting demonetized.

What should have been the hedge for inflation has not ultimately been such in the greatest inflationary period we've had since 1920. 

Gold is manly held by Governments. Also, is an asset that you hold on "paper", without actually owning it. Gold is slow, it takes great force to defend, and you cannot hold physically, even if you wanted, more than a certain quantity. Which makes it obsolete.

No big company with future market is buying gold. Not even those who mine gold want to hold on to it. 

Gold forecast? Gold will be depriced until meets its real value. A great metal. Better than silver, but not more than that. Hence why I am short since 2020. And further shorted every time it moved up. Ended up being right every single time. Time will tell us if I am correct or just a fraud.

Hi @Broxer93

Thanks for sharing your view on gold.

The following article by Seth Levine, I found to be an interesting read on gold, full article: How gold lost its inflation luster.

 

Gold no longer protects against inflation

Gold’s primary investment use is to hedge portfolios against inflation risk. However, the data simply doesn't support this thesis as sound. Gold’s price weakly correlates with common measures of inflation and is far more volatile these days.

 

Change In Gold Price vs Change In CPI

 

 

Gold Price vs CPI

 

Gold’s price weakly correlates with common measures of inflation and is far more volatile between 4/69 and 10/21. Source: FRED

As the charts above illustrate, gold’s price bears little resemblance to today’s most popular measure of inflation—the consumer price index (CPI). An effective inflation hedge would move in (near) lockstep. It should rise and fall along with inflation. Gold’s price movements, however, don’t. They are more volatile and mostly move independently of inflation, apparently driven by other factors.

 

Gold Break evens

 

Gold’s price does not correlate with inflation expectations either. Source: FRED

Nor does gold’s price correlate with inflation expectations, as shown above. Here too, gold’s price would rise and fall along with the market’s outlook if it were an effective hedge. However, no relationship exists.

 

By Seth Levine, 28th November 2021. Full article: How gold lost its inflation luster.

[Broxer93]

This is a great article.

If Gold can't hedge against inflation when it's at 6.7% (and that's only the official data, it's actually more), how can this be considered a hedge ?

Gold is down 7% since April 1st 2011. 

Gold is not a hedge for inflation. It's a fact.

[Broxer93]

7 minutes ago, MongiIG said:

Hi @Broxer93

Thanks for sharing your view on gold.

The following article by Seth Levine, I found to be an interesting read on gold, full article: How gold lost its inflation luster.

 

Gold no longer protects against inflation

Gold’s primary investment use is to hedge portfolios against inflation risk. However, the data simply doesn't support this thesis as sound. Gold’s price weakly correlates with common measures of inflation and is far more volatile these days.

 

Change In Gold Price vs Change In CPI

 

 

Gold Price vs CPI

 

Gold’s price weakly correlates with common measures of inflation and is far more volatile between 4/69 and 10/21. Source: FRED

As the charts above illustrate, gold’s price bears little resemblance to today’s most popular measure of inflation—the consumer price index (CPI). An effective inflation hedge would move in (near) lockstep. It should rise and fall along with inflation. Gold’s price movements, however, don’t. They are more volatile and mostly move independently of inflation, apparently driven by other factors.

 

Gold Break evens

 

Gold’s price does not correlate with inflation expectations either. Source: FRED

Nor does gold’s price correlate with inflation expectations, as shown above. Here too, gold’s price would rise and fall along with the market’s outlook if it were an effective hedge. However, no relationship exists.

 

By Seth Levine, 28th November 2021. Full article: How gold lost its inflation luster.

Ace!