Gold Jumps Above $1250 As USD Relationship Drops To 3-Month Lows

Tyler Durden's picture


Gold and silver are rising notably this morning with little specific news aside from the Bafin precious metals manipulation furore. Silver bounced off $20 and is now over $20.40 and Gold is back over $1250. What is perhaps more notable is that the USD is higher once again which supports the fact that the relationship between precious metals and the US Dollar is at its weakest since October (as opposed to its more normal negatively correlated relationship). As Dean Popplewell notes, "we are seeing a short-term phenomenon of physical demand supporting gold and helping to negate the strength in the dollar," as sales of American Eagles coins in January have topped the previous month. However, the tumble in correlation on a longer-term scale suggests gold has more upside to go in the short-term.


Gold and silver bottomed at 715ET and are back nto the green on the week now...

As the relationship between the US Dollar and Gold has dropped to its lowest in 3 months... (the higher the absolute correlation the more 'related' the two assets - with gold and USD


But on a longer-term basis, the correlation just plunged towards the -1 extreme... which in the past has signaled a rise in gold prices in the ensuing months...


As Bloomberg notes:

Gold is rebounding this year after the metal fell the most since 1981 in 2013 partly as the Federal Reserve signaled it would reduce monetary stimulus. Demand has picked up as lower prices attracted buyers. Deliveries by the Shanghai Gold Exchange almost doubled in 2013, and sales of American Eagle coins by the U.S. Mint so far in January topped the previous month’s purchases.

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Fri, 01/17/2014 - 13:09 | 4341367 Xibalba
Xibalba's picture

Mr. Enders: It's against our interest to have gold in the system because for it to remain there it would result in it being evaluated periodically. Although we have still some substantial gold holdings -- about $11 billion -- a larger part of the official gold in the world is concentrated in Western Europe. This gives them the dominant position in world reserves and the dominant means of creating reserves. We've been trying to get away from that into a system in which we can control ...

Secretary Kissinger: But that's a balance-of-payments problem.

Mr. Enders: Yes, but it's a question of who has the most leverage internationally. If they have the reserve-creating instrument, by having the largest amount of gold and the ability to change its price periodically, they have a position relative to ours of considerable power. For a long time we had a position relative to theirs of considerable power because we could change gold almost at will. This is no longer possible -- no longer acceptable. Therefore, we have gone to Special Drawing Rights, which is also equitable and could take account of some of the less-developed-country interests and which spreads the power away from Europe. And it's more rational in ...

Secretary Kissinger: "More rational" being defined as being more in our interests or what?

Mr. Enders: More rational in the sense of more responsive to worldwide needs -- but also more in our interest. ...

Fri, 01/17/2014 - 13:19 | 4341412 ArkansasAngie
ArkansasAngie's picture

Its a dog eat dog world ... 

The yen is going to 115.

The Euro is going to 126.

That must mean the dollar is going up!!!!!

Gold ... I'll believe it isn't manipulated the day that the CB's of the world admit they are behind the gross' manipulations in the past.

Fri, 01/17/2014 - 14:11 | 4341581 DoChenRollingBearing
DoChenRollingBearing's picture

I have written about both gold and Bitcoin.  I contend that both are worth owning, I own them both!  Of course gold is the core holding, but I think BTC is worth a look at as well.  Take a look at both gold and BTC as asset classes, including a "compare & contrast".

This is something I have wanted to write for a while now, as both are fascinating...

"Gold and Bitcoin"

Fri, 01/17/2014 - 14:56 | 4341735 Ulterior
Ulterior's picture

you know whats funny? a combination of words bitcoin and value

Fri, 01/17/2014 - 18:36 | 4342377 mickeyman
mickeyman's picture

Gold is only inversely correlated with the US dollar sometimes.

Fri, 01/17/2014 - 19:39 | 4342603 MeelionDollerBogus
MeelionDollerBogus's picture

gold's fiat price is much more in line with an inverse correlation to global bonds & real estate.

Fri, 01/17/2014 - 15:42 | 4341863 Manipuflation
Manipuflation's picture

Well done Sir.

Fri, 01/17/2014 - 14:55 | 4341730 thunderchief
thunderchief's picture

Reality just keeps assurting itself.

What a bitch in the paper markets.

Fri, 01/17/2014 - 13:09 | 4341368 Sufiy
Sufiy's picture

CITI Goes Bullish On Miners For The First Time In Three Years

Now CITI joins our small crowd with its bullish call on miners - it is very important development as now these news will go mainstream with the new money being allocated to the sector. Gold is particularly interesting now with the record high Leverage at COMEX of 112 owners for each ounce of Gold and record low level of Registered Stocks. Copper will be gaining attention as well with Chinese biding for huge Las Bambas Copper in Peru making the headlines again.

Fri, 01/17/2014 - 13:25 | 4341429 Frank N. Beans
Frank N. Beans's picture

ah, and here I thought GDX and GDXJ were going up because the Deutsche Bros. decided to get out of gold price manipulation.


Fri, 01/17/2014 - 13:09 | 4341370 Moe Howard
Moe Howard's picture


Fri, 01/17/2014 - 13:48 | 4341506 Ban KKiller
Ban KKiller's picture

But gold and silver are not "money" so why are they always being "fixed"? Like "fixing" your pet? 

Don't cut off my nuts. Just dump those PMs on me. 


Fri, 01/17/2014 - 13:09 | 4341372 Newsboy
Newsboy's picture


Fri, 01/17/2014 - 13:16 | 4341392 CrashisOptimistic
CrashisOptimistic's picture


What is that priced in bitcoins?

Fri, 01/17/2014 - 13:18 | 4341409 Newsboy
Newsboy's picture

$US 10,000/oz.

Wait for it.

Fri, 01/17/2014 - 18:37 | 4342381 mickeyman
mickeyman's picture

How many barrels of oil will it buy?

Fri, 01/17/2014 - 19:34 | 4342589 MeelionDollerBogus
MeelionDollerBogus's picture


Fri, 01/17/2014 - 14:09 | 4341570 Jonas Parker
Jonas Parker's picture

OK. $10,000 for silver. What do you think gold will be going for?

Fri, 01/17/2014 - 13:09 | 4341373 SlipStitchPass
SlipStitchPass's picture

TGD and LSG.....glad I stuck with them. :)

Fri, 01/17/2014 - 13:44 | 4341493 oddjob
oddjob's picture

LSG.....416 million O/S. :(

Fri, 01/17/2014 - 13:09 | 4341375 InjectTheVenom
InjectTheVenom's picture

YAAAWWWWWWN .     Wake me up at $2000.  Thank you.

Fri, 01/17/2014 - 13:18 | 4341408 Seasmoke
Seasmoke's picture

It must go thru $1250 before it goes thru $2000.

Fri, 01/17/2014 - 13:10 | 4341376 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

When it hits 1350+ I'll start to get interested.

Fri, 01/17/2014 - 14:58 | 4341743 Ulterior
Ulterior's picture

Thanks! thats my TakeProfit levels

Fri, 01/17/2014 - 13:13 | 4341388 Magnum
Magnum's picture

Oh brother a ZH story about soaring gold. Is it up $8 again?

Fri, 01/17/2014 - 13:23 | 4341421 fijisailor
fijisailor's picture

And there's probably no manipulation huh?

Fri, 01/17/2014 - 13:22 | 4341422 NoDebt
NoDebt's picture

No, it's up 50%.....

..... more than $8 (it's up 12).

Fri, 01/17/2014 - 17:42 | 4342234 Greenskeeper_Carl
Greenskeeper_Carl's picture

I'm not jumping for joy, or saying its going through the moon now, and I agree with your sentiment. The only thing a little different about this one is it happening l a Friday like this, and it is rare that gold and silver are allowed to finish in the green on a Friday, especially with a holiday on Monday.

Fri, 01/17/2014 - 19:32 | 4342580 MeelionDollerBogus
MeelionDollerBogus's picture

even better! More than one THOUSAND seven hundred pennies.

Fri, 01/17/2014 - 13:16 | 4341393 DoChenRollingBearing
DoChenRollingBearing's picture

Soon, soon!  I am working as fast as I can on a quality piece on gold and bitcoin, it's coming...  Knowledgeable commentators are welcome to look and send me comments or emails to make it a better piece.

Fri, 01/17/2014 - 13:16 | 4341395 monopoly
monopoly's picture

I never would have guessed. Amazing. 

Fri, 01/17/2014 - 13:19 | 4341410 youngman
youngman's picture

If I was an Argentinian....Turkey....I would be buying....and several other countries right now.....just to survive

Fri, 01/17/2014 - 14:19 | 4341607 disabledvet
disabledvet's picture

where do they get it from? Russia? I don't think so. Turkey actually has very larg gold deposits. Argentina has some very interesting geology as well (and appears to be operating in a permanent State of bankruptcy just fine actually.) The market is just trying to price in "meteor mining" that's all. Ten to fifteen million in daily launches is nothing for a State budget. California, Texas, "the Southeast." they're all generating large to massive surpluses right now.

Fri, 01/17/2014 - 14:57 | 4341738 eurogold
eurogold's picture

Try buying Gold ( in any form ) in Argentina.......Good Luck !

Fri, 01/17/2014 - 15:01 | 4341758 eurogold
eurogold's picture

Try buying Gold ( in any form ) in Argentina.......Good Luck !

Fri, 01/17/2014 - 19:31 | 4342576 MeelionDollerBogus
MeelionDollerBogus's picture

Argentina? Damn, you'd think with a reputation like that they'd name it after silver...
oh wait...

Fri, 01/17/2014 - 13:20 | 4341415 RockRiver
RockRiver's picture

"Gold and silver are rising notably..."


Wow, Tyler, I am impressed.... Understatements are not the norm around here.



Fri, 01/17/2014 - 13:39 | 4341472 NoDebt
NoDebt's picture


Just for you, Rock.  I figured you were desperate for your daily fix of wild hyperbole.

Fri, 01/17/2014 - 14:04 | 4341551 RockRiver
RockRiver's picture


Just for you, Rock.  I figured you were desperate for your daily fix of wild hyperbole.


I feel better now....

Fri, 01/17/2014 - 13:26 | 4341433 Stoploss
Stoploss's picture

It's all about the FX.

This is what losing control of price manipulation looks like, albeit what seems to be a painfully slow process, always results a rather sharp price adjustment when all is said and done.

Maybe that's why it's called golden dawn. Sounds like you wake up one day an poof, there's another zero attached to it.

Hey, it worked for the Roman's, for about a year.

Fri, 01/17/2014 - 13:29 | 4341438 101 years and c...
101 years and counting's picture

stocks also surging.  i guess its "buy lots of paper trash day".

Fri, 01/17/2014 - 13:32 | 4341454 JamesBond
JamesBond's picture

i have never understood why silver going from 20.1 to 20.4 is considered 'earth shattering' movment....





Fri, 01/17/2014 - 13:35 | 4341460 LawsofPhysics
LawsofPhysics's picture

it's all relative to the size of your position in the paper market.

Physical just sits around being a safe store of value.

Fri, 01/17/2014 - 13:40 | 4341474 101 years and c...
101 years and counting's picture

i dont see how its a safe store of value if you bought at $50 in 2011.

or if it drops to $10 in the future and you paid $23 today.

just sayin...

Fri, 01/17/2014 - 13:47 | 4341508 debtor of last ...
debtor of last resort's picture

No, it's not. I keep my false and manipulated paper promises in fiat currencies, casino stocks, Japanese muni's and long term piigs paper. And in the near future all my profits will be invested in the best btc mining equipment i can find.

Fri, 01/17/2014 - 14:18 | 4341604 Oldballplayer
Oldballplayer's picture

I agree with you.  I read all of this stuff about PAPER gold!  But I have to convert my gold to fiat to buy gasoline, which is paid for in paper.  So you see, the value of my physcial gold in gasoline has gone down significantly over the past year.

Good thing I had a shitload of that digital stuff that I can convert for a shitload more of fiat than gold.

Fri, 01/17/2014 - 14:19 | 4341610 Oldballplayer
Oldballplayer's picture

And I had to buy a kilo of Silver Nitrate today.  And the price of that shit just goes up.

Fri, 01/17/2014 - 19:28 | 4342558 MeelionDollerBogus
MeelionDollerBogus's picture

no you don't. you can wait till paper isn't used as money any more then directly go from silver coin to gas in the tank with no paper in the middle.

I use paper to get paper, I use paper to get metal, and I'll use metal to get goods when paper isn't money anymore.

Fri, 01/17/2014 - 19:27 | 4342550 MeelionDollerBogus
MeelionDollerBogus's picture

safe store of value = not paper price
safe store of value = atomic value, ability to be used in industry, chemistry, as medicine & will not be traded for paper at $50000/oz or at $5

Jus' sayin.

Fri, 01/17/2014 - 19:26 | 4342545 MeelionDollerBogus
MeelionDollerBogus's picture

indeed. Won't inhibit any deliveries for me. For my agq calls because I'm going cheap on input cost my break-evens are around 35. For silver equivalent that turns out to be (agq x 24 ) ^ 0.5 or 29/oz roughly.

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