One interesting occurrence that has not been written about in the precious metals alternative media or blog space yet is that gold has been quietly moving in tandem with the dollar over the past several trading sessions. It has been quite pronounced during the past four trading days, today inclusive. In the previous 15 years, gold’s best periods of return have occurred when gold and the dollar move in tandem higher for a brief period of time, followed by a period of time when the dollar heads south and gold continues higher.
If you look at graphs of both gold and the dollar side by side, you’ll see that this occurred in late 2005 into early 2006, when gold moved higher until May while the dollar fell and again in late 2008. It’s too early tell if that will happen now, but suffice it to say that both are moving in tandem right now and it’s worth watching to see if it continues. My theory is that there’s flight to safety into gold and the dollar ahead of an adverse economic event. As the event unfolds, the dollar begins to sell off but capital continues to flow into gold as the ultimate wealth preservation asset.