Posted by Francis Koh on 11 Nov 2014

CENTRAL BANK INSANITY: The More Yen Japan Prints, The Lower Price Of Gold…Until???

My interest is the relationship of gold and the Yen. Seems the weakening of the Yen is driving the price of gold…down. Of course the Yen’s weakness is conversely the dollar’s relative strength…but from ’09 and particularly since Japan’s December 2012 turn to “Abenomics”, Gold and the Yen have moved tick for tick. The more Yen Japan prints, the farther the price of gold falls…ahhhh the irony that gold, the finite measuring stick of infinite currencies, seems now only to be measuring the depths TPTB will go to hide currencies relative worth!

Note in the chart below the relatively mild dollar movement vs. the strong correlation of gold vs. the Yen…particularly gaining strength since the onset of “Abenomics” in late 2012.

I can’t say whether this relationship is the work of derivatives or long / short pairs or some other means. The mechanism(s) may be debatable, the durability of paper vs. physical in question, but the relationship is undeniable that the Yen is the anchor sinking gold’s price.

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CENTRAL BANK INSANITY: The More Yen Japan Prints, The Lower Price Of Gold…Until???