A Low Spot Amid Gold's New Highs

[BullBearGirl]

Below is a link to an article by Brad Zigler of Hard Assets Investor. I find him worth listening to. If the link doesn't work, just go to www.hardassetsinvestor.com then click on Brad's Desktop in the left hand menu. Then go to his article of May 6, 2010 titled "A Low Spot Amid Gold's New Highs"  which includes a "GLD Closing Price vs Money Flow Index" chart.

 

http://www.hardassetinvestor.com/component/content/article/3/2124-a...

[BullBearGirl]

I tried doing my own candlestick chart on this using high, low and closing prices and the MFI is not in overbought territory (although close to it) nor is it showing a negative divergance to price. Could it be that using closing prices on a chart is more accurate? I am unable to chart using closing prices so I wonder if that is what the difference is. Note also that the top of his chart says Money Flow Index and the side of the chart says Money Fund Index. Could this just be a typo or could it be a more meaningful discrepancy?

[BullBearGirl]

Important update to this post: I posted questions at Brad Zigler's website and he replied by saying the Money Flow Index has been pointing up over the past few days. I believe this would negate the caution against gold given by his previous chart, which had a declining Money Flow Index.

[Steven Vincent]

I think that under normal circumstances he might be onto something but we are currently operating under anything but normal circumstances. In fact, that info may fit well with the current thesis of a new liquidity squeeze that I am currently developing. The money leaving the GLD may reflect the OVERALL withdrawal of liquidity from any electronic, leveraged asset to real gold and treasuries. if the urge is to get liquid as fast as possible ALL leveraged trades get dumped and money goes to cash.

Gold itself may continue to rise on physical demand even as electronic demand wanes.

I do think it is very possible that in the first phase of a deflationary collapse (another one!) gold could also go down as electronic gold is deleveraged. Then it could stabilize and rise on physical demand.

Right now we are seeing LIBOR spreads widening and the Yen carry trade blowing up. Those are two major indications of liquidity contraction. If we see the Yen rally again on Sunday/Monday and LIBOR rates jump....it could be a Black Monday.

[BullBearGirl]

Thanks for your comments, Steven.