Yen/Gold

I watch the charts and try to match the stories in the financial news to what the charts tell me. There are lots of stories and only one set of charts. The interrelationship between markets is endlessly fascinating, and often tell or foretell the direction of other markets.

I have for some time noticed a strong intraday correlation between the Japanese Yen as represented by the ETF FXY, and the intraday action in GLD (gold). On the daily chart there is really not much correlation except on the sharp spike days. But the Yen looks to be bottoming, or trying to. I see a large increase in volume in FXY with sideways movement after a long decline. That to me is a sign of bottoming and a possible change of trend. There are lots of problems for the world if the Japanese loose control of their interest rates, meaning if Japanese interest rates rise uncontrollably it will have the potential to bankrupt the Japanese government. Perhaps the next chapter in sovereign debt crises that are working their way around the world. What goes around, indeed seems to come around. Time will tell, of  course, and timing is very valuable. (This is why I prefer charting, it is "real time".)

So I am watching for a rally in the yen and thinking it will be supportive for further strength in gold and the PM's in general. Copper is another story as it is an industrial metal, but it IS priced in US Dollars, so....

The stock averages weak at the open. We will have to see another attempt at a rally/bottom picking here. If the "rally" is during the middle of the day I expect a sell at the close. Looking for a weak week in stocks, but I am always mindful of "the company I keep".

Control risk,
gh