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A Major Development in the Gold Market

By Brian Hunt and Ben Morris, DailyWealth Trader
Monday, February 9, 2015

It has been a volatile couple of months in the market... And financial disaster is on readers' minds.
 
Over the past two weeks, dozens of DailyWealth Trader subscribers have written in asking us how to protect their wealth in a crisis.
 
Fortunately, there's one clear action you can take today...
 
As regular Growth Stock Wire readers know, smart asset allocation is the best way to protect your wealth in any market environment. When you spread your wealth across different asset classes – like stocks, bonds, real estate, precious metals, and cash – you're much less likely to suffer a catastrophic loss. That's why asset allocation is at the core of our "catastrophe-prevention plan."
 
And we see gold as "financial disaster insurance." If a disaster occurs, gold could soar in value... And having some of your portfolio allocated to gold could save you from a huge drop in net worth.
 
Just like car or home insurance, we hope to never have to use our gold... but we buy it just in case.
 
And in the past six months, there has been a major development in the gold market. You see, gold tends to act as the "anti-dollar"... Traditionally, when the dollar declines, gold advances. When the dollar advances, gold declines.
 
But since the beginning of July, the dollar has soared 19%... an enormous move for a major currency in a short time. And instead of plummeting to a new low in response, gold has put in a bottom in the $1,140-$1,200 area... and it has recently climbed above that level.
 
So why is gold holding steady now, while the U.S. dollar is soaring?
 
There's a special factor supporting the gold price today. Currencies all over the world are plummeting in value. In a desperate bid to stimulate their economies, the central banks of Europe and Japan are rapidly devaluing their currencies.
 
Since mid-2014, Europe's currency, the euro, has plummeted 19%. In the past three years, Japan's currency, the yen, has plummeted 36%. Many other major currencies, like the Canadian dollar, the Australian dollar, and the Russian ruble are also down big.
 
Devaluing their currencies makes exports cheaper and more attractive to foreign buyers. Plus, it makes paying off debts easier... since they pay back the debt with devalued currency.
 
This decline in global paper currencies is so big... so severe... and so broad... it has overwhelmed the traditional tendency for gold to decline when the dollar rallies.
 
People are fleeing paper currencies and buying gold. They see the metal as a safe haven. It is the only currency that is not someone else's liability. It is a store of purchasing power that can't be printed at will. This has allowed gold to hold steady in the face of the dollar rally. It is holding steady when it isn't "supposed to." And when an asset refuses to fall when it's supposed to, it's a very bullish sign.
 
We think it's likely that gold has put in a floor in the $1,200 area, which you can see below.
 
 
If you haven't already bought "financial disaster insurance," our top recommendation is to buy gold bullion soon.
 
Governments around the world are devaluing their currencies... And gold is holding steady in the face of a soaring dollar. This is a major bullish development.
 
Good trading,
 
Brian Hunt and Ben Morris




Further Reading:

Dr. David "Doc" Eifrig has shown readers how powerful it can be to hold "chaos hedges" – like gold – in your portfolio... "When investors get nervous about bad economic news... debt crises in Europe... and the specter of runaway inflation in the United States," he writes, "stocks fall, and gold and silver rise." Learn how Doc protects his wealth with precious metals here.
 
"99% of gold and silver owners are all wrong in the way they view their holdings," Doc writes. "I take an unusual approach to my holdings. I hope I lose money on them." Learn what poor people don't know about gold here.

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Market Watch
Symbol Price
Change
52-Wk
S&P 500 2055.48 -0.3% +15.9%
Oil (USO) 19.44 +2.2% -44.3%
Gold (GLD) 118.72 -2.5% -2.1%
Silver (SLV) 16.03 -3.3% -16.4%
U.S. Dollar 94.65 +1.2% +17.0%
Euro 1.13 -1.5% -16.9%
Volatility (^VIX) 18.59 +10.3% +7.9%
Gold Stocks (^HUI) 192.98 -5.4% -9.3%
10-Year Yield 1.94 +6.6% -28.2%

From The Crux
World ETFs
Symbol Price
Change
52-Wk
India (IFN) 28.79 -0.4% +56.6%
China (FXI) 42.05 -2.2% +26.1%
S. Africa (EZA) 69.34 -2.8% +22.7%
Taiwan (EWT) 15.46 -2.0% +16.3%
USA (SPY) 204.99 -0.6% +17.8%
Singapore (EWS) 12.93 -0.3% +8.9%
Japan (EWJ) 11.63 -1.0% +4.6%
Israel (ISL) 16.81 -0.1% +5.6%
Canada (EWC) 27.54 -1.3% 0.0%
S. Korea (EWY) 56.01 -1.8% -3.8%
Lat.America (ILF) 30.95 -1.7% -6.2%
Russia (TRF) 9.14 -0.7% -31.8%

Sector ETFs
Symbol Price
Change
52-Wk
Semis (PSI) 25.50 +0.1% +42.7%
Real Estate (IYR) 79.92 -2.9% +27.0%
Utilities (XLU) 46.33 -4.6% +24.0%
Retail (PMR) 39.61 +0.2% +27.8%
Biotech (PBE) 51.39 -1.3% +27.7%
Health Care (IYH) 147.04 -1.2% +27.3%
Transportation (IYT) 159.83 -0.7% +25.3%
Big Tech (QQQ) 102.79 -0.9% +21.7%
Consumer Svcs (IYC) 139.35 -0.5% +20.7%
Defense (PPA) 35.83 +0.9% +17.8%
Financials (IYF) 88.72 +0.0% +16.5%
Software (PSJ) 39.91 -1.3% +13.1%
Industrials (IYJ) 106.60 -0.2% +12.5%
Insurance (IAK) 48.37 +0.7% +13.7%
Basic Mat (IYM) 83.67 -0.4% +9.7%
Telecom (IYZ) 30.23 +0.3% +9.5%
Media (PBS) 25.65 +0.4% +2.9%
Construction (PKB) 21.88 +0.3% +0.9%
Water (PHO) 24.89 -0.6% -0.9%
Alt. Energy (PBW) 5.21 -0.8% -15.1%