Higher With Vengeance

"John, in the back of the truck you're driving, there's $13 billion worth in gold bullion. I wonder would a deal be out of the question?"

--Simon Gruber (Die Hard With a Vengeance)

Back in midsummer when gold wasn't making much headway, it felt to me that perhaps we were putting in an intermediate top. So much for my feel, as gold has exploded higher and is marking records almost daily.

That said, the gappy nature of the recent price action certainly gives me pause, as does the 'twisty' overbought nature of the oscillators.

The primary motivation behind gold's run up is worry about the dollar. After all, the Fed has been generating supply to stem the current economic malaise. And indeed the dollar has been dripping lower.

I find it interesting, however, that the gold:dollar relationship is not has well correlated as one might expect. Sure, gold is going up while the USD is going down. But gold's increase is hyperbolic while the dollar's decline is pretty much linear.

Long term, I'm as bullish as they come w.r.t. gold. However, the technical action draped against my deflationary backdrop makes me much less sanguine about gold in the near term.

I'm currently playing it with bullion only (which isn't tradeable for me). No paper gold.

position in gold, USD