Yesterday we posted some comments from a futures trader about why he thinks gold is tanking.
Since then, we’ve received a bunch of emails from traders sharing their thoughts about why gold is down.
This is a response we received this morning from David Flynn, The Radar Trader, who has agreed to let us run his comments and charts below.
Check it out:
See the 60 min chart below showing Gold in Red and the $ Index in Black. Note they are trading in tandem right now.
Now see the chart below of Gold (left axis) vs Federal Reserve Board (FRB) total assets (right axis)….Note that FRB total assets line has been very sideways this year…..The FED has committed to purchase $40Bn per month in MBS + $45Bn per month in Treasuries (QE). That’s a total of $1020Bn in QE next year, over $1 Trillion in balance sheet expansion. See right axis of chart below….That takes FRB total assets from roughly $2.9 Trillion to over $3.9Trillion.
If this does happen, the Gold selloff will be short lived. The market expects new QE in January. That is when the yield curve, it’s relationship with Gold and the $ will be important.