Gold and the Black Swan

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Gold appears to be entering the “summer doldrums” season, but there are some black swan issues that could add a lot of volatility to the market.

Please click here now. You are looking at an article from The Economic Times of India, and it’s pretty clear that demand for gold has slowed down, as it often does at this time of year.

When demand for physical gold slows down in India, the price often tends to meander aimlessly, frustrating both the bulls and the bears.

Please click here now. That’s the daily T-bond chart. It’s difficult for gold to rise if bonds can’t move higher, and the bond chart seems to suggest that gold is heading for a period of lackluster price action.

You can see that my “stokeillator” (14,7,7 Stochastics series) looks terrible.

It’s oversold, but it looks tired, like a burnt-out athlete.

Please click here now. Double-click to enlarge. That’s the weekly chart of the Dow, and followers of the “sell in May and go away” mantra are extremely frustrated.

Many gold market investors are momentum-oriented, and they want to be where the action is, even if there is value in owning gold at the current price.

The relentless rise of general equities continues to attract money from gold. That’s unlikely to change unless the Dow “finally” takes a real hit. May has come, and it’s almost gone, and still there is no sizable sell-off!

At the end of the 1970s bull market, the Russian invasion of Afghanistan caused investors to pour into the gold market.

A geopolitical event like that could be a game-changer for the stagnant condition that gold is experiencing now, but how likely is such an event?

Well, the situation in Syria seems to be worsening, and the action of my stokeillator on the daily gold chart does suggest that some sort of rally is imminent.

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