(1) The negative correlation between gold and consumer expectations, a proxy for consumer spending – a large contributor to economic growth in the United States, is strong. This correlation tightens during periods of aggressive currency devaluation and economic stress.
(2) Any temporary up tick in consumer expectations, regardless of explanation (i.e. extension of tax cuts, extra stimulus, or hope fostered by unrelenting media hype) only provide ‘fuel’ for gold next advance when it inevitable falters within a slow growth, debt-laden economic environment.
(3) The major cycle date is not due until 2015-2016.
University of Michigan Consumer Expectations (CE) and Gold: A Correlation Study:
Headline: Consumer Sentiment Improves Slightly During Late January
U.S. consumer sentiment improved in late January, as hopes of a stronger economy and more jobs overcame worries about rising costs for food and gasoline, a survey released on Friday showed.
Expectations of more cash to spend due to federal tax cut extensions and a temporary reduction on payroll taxes also brightened consumers' mood, according to the latest consumer survey from Thomson Reuters and the University of Michigan.
"The tax cuts, nonetheless, helped to improve overall prospects for the national economy, including job prospects," said Richard Curtin, director of the Thomson Reuters and University of Michigan survey.
Source: cnbc.com
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