EclecticLip

(Originally written June 14.  Posted, with modest supplemental info, June 17.) 

For those who follow my investing adventures (or “monetary misadventures”, depending on how the year’s going    ) gold made it onto the front page of the New York Times this past weekend.  An example of the “magazine cover indicator“, this strongly suggests that it’s due for a plummetting pummelling.

I’d expect this for gold priced in Euros — its slope was nearing positive infinity with the various crises (see the blue line in the image below).  And in market arrangements, things which rise sharply in price — whether the Nikkei index circa 1990, Nasdaq circa 2000, or Shanghai circa 2008 — tend to fall back sharply when the upward momentum stops.  Gold in Euros (blue) dropped sharply after seeing soaring gains in ‘06 and ‘09 — and fell sharply after rising sharply against the US dollar in ‘06 and ‘08 (red).

With the magazine cover, it seems highly probable gold will be cheaper in a couple months’ time, regardless of what might happens in the next couple weeks, as the investing classes find other amuse-portfeuilles for their wallets.  (On account of other self-fulfilling indicators, summarized finely by the pseudonymous Jesse here, I figure its price is due for a modest surge in the very near term.)

Euro-wise, the news has been so bad out of Europe for so long, that the Euro seems likely to strengthen for the next little bit: everyone who wanted to sell, has already sold.  As such, the trading algorithms of government-moneyed investment-bank speculators (whose predecessors Adam Smith characterized as an “idle class”) are likely trading dollars for Euros using some of those very same complex instruments which necessitated their  bailouts.  Ah, few things match the hypnotic stupor of a flatlined learning curve — as long-suffering Leafs (and Canucks) fans will surely attest! 

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