Global events currently support gold and Australian gold stocks. Yet gold and the ASX-XGD index have been in a consolidation and correction mode of late. The Australian gold sector has underperformed gold itself over the past two weeks, within a long-term uptrend, offering some sweet pickings which we did not waste. Investors swooped on these exceptional investment opportunities late last week as the Australian gold sector surged up from oversold lows. Here are the supports (from 5 year – 1 week tick chart) I provided in Newsletter 27 released 16th March:
“We are currently at important support from both the horizontal line A which is old resistance – possibly new support, and also rising trend support line B. RSI is also at key support as we have not been lower since that dramatic swan dive during the GFC in 2008.” Since I posted this for subscribers we have rallied 476 points in two days nearly touching 7,500 today (Monday 21st).
Japan Inc includes the Sovereign Fund which holds the foreign reserves. These reserves are sitting in other currencies and bonds not cash in Yen. These holdings are not fully hedged as is being claimed in the markets and media today - this is absolute spin. The days of “spin your way out of trouble and it will all solved” are over because the troubles are just too deep. The Greenspan days were classic for this but now jawboning is gradually becoming less and less effective. The Japanese would not buy risky high yield assets and then fully hedge then what would be the point?
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