March 1, 2021 - (Gold Market Wire) - We said that Friday's close was going to be critical, and indeed it was. Either the 'bargain hunters' were going to emerge and take Gold back up, or a second wave of liquidation selling was going to cause an precipitous fall on the close. We got the latter of the two scenarios. Gold is bouncing in the European a.m., but its chart position is nothing short of terrible.

This is no part-time phenomenon. Gold is getting hit, and has been hit, properly, for two solid month now. If we zoom the above chart out, we can see how the wider channel has plenty of down-side room.

Once again we are faced with the bare facts: 1) The Goldbugs have been routed. and 2) Anyone who chased strength got properly hammered. The market is weak, and recovery is unlikely to happen in the near-term. We abandoned flat-price trading for the Gold/Silver ratio (short), and manged to get out of the position a few days before the retracement. We then hit the sidelines, maintaining only a long US Dollar position. So, we remain grateful for not chasing action, not catching falling knives, and being happily on the sidelines while the mayhem ensued.

We remain bullish the US Dollar, though we are repeatedly told that we are wrong. We doubt it. The US Dollar has just retraced/back and fill-style, and promptly charged again. We like that kind of action, and plan to maintain our length. The chart is now poised on the 100-day moving average, but the trend line has given way. We think that indicates further strength.

One thing worthy of note, in considering the on-going debate about the "inverse monetary proxy" of Gold and the Dollar is that Gold's latest sell-off has had very little US Dollar component to it. Gold has taken it hard on the chin since the 2nd week of 2021, while the US Dollar has actually done very little. While it is true that an element of 'catch-up' can be at work with these two instruments, we take the, perhaps, more simplified outlook that the two components really have less 'inverse correlation' than a few years ago. It's just not a workable argument that can be applied in the trading arena.