Tony: Founder of KhronoStock.com and KhronoStock Blog Network
On Relationship between Gold and Treasury from KhronoStock contributor Mike of Movermike.com.
BY MOVERMIKE ⋅ JULY 23, 2009 ⋅ POST A COMMENT
I looked at the 10-year treasury at the end of the day and the chart looks familiar. Here’s what I saw:
That’s the weekly chart of $UST10Y and notice where I’ve drawn the black line. It looks like a reverse head and shoulders. I’m not a Elliott Waver, but this chart has two pulses up from the low. All we need nowis the fifth wave and that should be up. Now if the 10-year broke through that line, we could project higher interest rates to the 6%. The “why” of going higher could be worries about credit quality or inflation.
Here’s my second chart, $GOLD, the Gold Continuous Contract:
I’ve drawn that black to indicate resistance. If we break that line to the upside, we could project maybe $1,300 as an upside target. The “why” of going higher could be fear of currency collapse or inflation.
Is there a relationship between the 10-year treasury and GDX (Market Vectors Gold Miners):
Here’s the chart of GDX and the line I’ve drawn. It shows a breakout above the line and a test of the line. Now let’s overlay performance of the 10-year treasury with the GDX:
There was a period for about two months at the end of 2008, where the two were moving opposite each other, but since then the two seem to be in gear.
Once again, it appears that if interest rates break out first, then Gold and Gold stocks will move higher.
I’m betting my money that I’m right about the direction and I’m long CDE and CEF!
