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Gold weakens while crude rises
By Colin Twiggs
February 14th, 2013 3:00 a.m. ET (7:00 p:m AET)
Gold is undergoing a correction on the weekly chart. Breach of support at 1625 would indicate another test of primary support at $1525. Retreat of 63-day Twiggs Momentum below zero warns of a primary down-trend. Recovery above $1700 per ounce, however, would indicate that the correction is over.
Crude oil, however, is rising, with Brent Crude breaking resistance at $117/barrel to signal a primary up-trend. Twiggs Momentum rising above zero already suggests an up-trend. Recovery of Nymex WTI above $99/barrel would confirm.
* Target calculation: 116 + ( 116 - 106 ) = 126
Normally gold and crude move together. A divergence would be highlighted by the gold-oil ratio (below). A decline to 10 is normally taken as buying signal, but in recent years fluctuations have been a lot narrower — between 12 and 18.
Cause of the 2007/8 crash and threatened double-dip in 2010
Here is the smoking gun. Note the sharp contraction in the US monetary base before the last two recessions and again in 2010. Monetary base is plotted net of excess bank reserves on deposit with the Fed, which are not in circulation. The Fed responded after the contraction had taken place, instead of anticipating it.
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