To say the USD is going to rally is perhaps inaccurate. More likely USD 'strength' is in fact Euro weakness. Since the Euro is perceived as the alternate to the dollar, and since there is a very real threat to the stability of the Eurozone as the latest financial meltdown builds momo, then perhaps the money flow is out of the Euro and back into the dollar. The USD is probably a beneficiary of short covering now as well, which has a limited shelf life. Otherwise, the fundamentals for the USD stink and will continue to stink, so I am not about to worry too much about a doom scenario for gold.
The dollar may become stronger relative to other currencies, but gold is and has always been the ultimate currency and it will appreciate against all others, regardless of how the dollar behaves in the future. The biggest mistake that most analysts make is in assuming that gold is just an inverse play to the dollar. Look up the price history for gold, including the price gold traded at the last time the dollar was north of .77 cents.
The second biggest mistake that most analysts make is believing the spot price has anything to do with the legitimate price discovery for gold. The spot price is a function of the derivitive exposure. Physical bullion is tighter than a frogs ass, which as we all know, is water tight. The big price move higher in the last couple of months was triggered by physical demand. This demand has not gone away even though we are seeing some rollover in the paper contracts. In fact, reduced spot prices will probably encourage more buying. Margin call selling of paper gold is also subject to a limited shelf life.
Maund is good at calling long term trends, but his analysis has been very poor in terms of timing for countertrend moves. Just like the global warming agenda, he is good at sounding alarms but the doom he warns of never comes to pass.
cheers!
mike
