The US dollar and commodity prices are supposed to be inversely related, or so we saw during so much of the last 2009 gold rally. Quite simply, global commodity assets quoted in dollars cost more as other currencies rise. But now the markets find themselves in a new spot. The Euro is still having real issues because of Greece and the lands of the PIIGS and Europeans are choosing to buy gold over dollars.
We are watching the SPDR Gold Shares (NYSE: GLD) and ETFS Physical Swiss Gold Shares (NYSE: SGOL), then we are watching the Market Vectors Gold Miners ETF (NYSE: GDX) and the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ).
The main play today is the SPDR Gold Shares (NYSE: GLD) as it is the most liquid and directly the most representative of the move in gold each day. At $112.38, today’s high was $112.93 and above the March 3 high of $112.18 on day that closed at $111.63. The last cycle high was January 11 when we hit a high of $113.59 and a close of $112.85. In short, we are within striking distance of 2010 highs all over again.
In dollar terms, this represents both 30-day highs and 60-day highs for the shiny yellow stuff now that prices went above $1,150.00 per ounce. Amazingly, this represents an all-time high in Gold again in Euro terms as showed by Kitco.
The 10-Year Treasury auction was a success today and that is causing longer-dated yields to fall. The 10-Year was just at 4.00% in the last week, yet the rate is now 3.87%. The EUR/USD is now 1.3369, down by -0.0025.
The ETFS Physical Swiss Gold Shares (NYSE: SGOL) is up 1.15% at $114.56; the Market Vectors Gold Miners ETF (NYSE: GDX) is up 3.2% and the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) is up 1.57% at $27.81.
Stocks have been weak most of the day but from start to finish during the few minutes this took, the DJIA went from about -50 to -108 around 10,861…. 11,000 is proving to be elusive.
JON C. OGG
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