In search of intrinsic value

Guido Romero Rank: 126 Followers: 2 Votes: 0 Years Member: 7 Last Update: 16 September 2014, 3:09 Categories: Relative Performance Charts
Gold / Gold Stocks

Sept16/14 - Gaps in the major funds all closed. I am perplexed however. There are still gaps in relative charts compared to major Western currencies. Nonetheless, CEF has put in a clear hammer yesterday. A bounce is a high probability. We will have to observe the action hence forth but it looks generally constructive.

Aug 9/15 - Whilst GDX has closed the gap, GLD is $2.04 and CEF is $0.02 away from doing so. There is a divergence in the EUR/CHF price action... bears watching.The US$ has broken out of its 4 year range but I am waiting till end of the week for confirmation

Aug 5/14 - The US$ is sporting positive divergences. Conversely other currencies are being squeezed. The big news is that GDX has closed the gap and that CEF is only $0.20 from closing its gap. If this bottom is for real in the PM sector, the next few days should give us the closing of gaps across the board and a reversal up of stock and bullion funds. If this should happen, we'll observe the character of the advance but, so far, things are looking constructive...

Jul 21/14 - Amongst Western currencies, the Canadian $ is the one closest to breaking long term support. The oil price has broken down on the daily and is due a bounce. Bullion funds as well as precious metal funds are all sporting gaps some 5% below current levels. It is a symmetry that reinforces the probability that the gap will be closed - hopefully sooner rather than later.

July 8/14 - I am finding negative divergences everywhere I look in the oil segment. Oil companies, service providers, refiners... everywhere! On top of it, the market does not seem to believe the latest news that ISIS (or the Islamic State) is now in possession of nuclear material in Iraq.... something is definitely rotten in the oil patch....

June 24/14 - It is my opinion that the price of oil is key to maintaining the derivative pyramid standing. The technical picture of the price of oil is horrendous however. The fundamentals are even worse. In fact, the fundamentals of oil are so dismal that not even


100 - $SPX since 1980

The S&P is the benchmark I use to illustrate and buttress my argument.

101 - US$ purchasing power versus CPI

105 - 30years US Treasury Bond since 1980

110 - $SPX, the 30yr US TBond and the US Dollar since 1980

120 - $SPX and gold since 1980

125 - Gold since 1980

126 - Gold bullion inflated by the purchasing power of the US$

130 - $SPX valued in terms of gold bullion

135 - The 30yr US Treasury Bond valued in terms of gold bullion

140 - $SPX valued in terms of $XAU the gold mining company share index

Oct 7/13 - This is the power of the Fed. By simultaneously giving trillions to the banks and keeping interest rates artificially low, it can induce corporate re-financing thus boosting the nominal value of the stock market. The direct ramification of this policy is the devastation of purchasing power thus abetting inequality.

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