Dust flux, Vostok ice core

Dust flux, Vostok ice core
Two dimensional phase space reconstruction of dust flux from the Vostok core over the period 186-4 ka using the time derivative method. Dust flux on the x-axis, rate of change is on the y-axis. From Gipp (2001).

Friday, November 21, 2014

Decision time

Last month we saw this chart--in which the swings in the GoldxUSDX index had formed a triangle going back over a year. At that time we were quite close to the apex.

The last few weeks have been eventful. We saw a clear break below the lower trendline, followed by a bounce up above the upper trendline. It appears a decision has been made.

Barring further smashdowns, it seems we are moving out of the triangle and into a climb. Supporting this is the action of the last few weeks in the chart of USDX vs gold price.

In the last two weeks, we are seeing the impossible--a rise in the gold price and the US dollar.

This isn't as impossible as it seems--we've seen this before, from late 2009 to about mid-2010. It was a good time to be invested in gold equities.

Our current position on the chart is given by the yellow arrow. We are virtually in the same position as we were in late May of 2010. The yellow ellipse covers the area of the move of the last three months. Now is the time to be long gold and gold miners.

Notice that during the impossible trend in the past, gold and USDX never rose together for more than two consecutive weeks. The move was seemed to be a series of cycles and countercycles, over which both parameters increased.

As I've argued previously, rising gold and US dollar is the most economically favourable environment for gold equities--particularly those with production. If the number of dollars you receive per unit of gold increases, and at the same time the value of those dollars increases, your revenue increase will reflect both inputs.

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