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This has been a volatile, whipsaw trading environment for many gold, and gold stock traders. But, it shouldn’t be. Because gold, and gold stocks have been following a veritable bread crumb laden, yellow brick road-map.

Don’t believe it?

Balderdash, you say?

A little too much hubris?

We shall see…

But before I get to the bread crumb laden, yellow brick road map, let’s pause for just a minute and discuss the trading environment for gold, and gold stocks.

Sometimes in a complex trading environment, it’s best to take a step back, and focus on the simple. If you’ve been trading gold on it’s fundamentals, I’ll acknowledge that it’s been frustrating.

Gold, and gold stocks have corrected into the face of oil exploding, inflation soaring, and global markets crashing.

– whodathunkit?

Instead of busting out and running to new highs, gold and gold stocks have been slammed back and forth in a violent trading range.

The TA charts haven’t worked. Gold and gold stocks have broken above, and below trend lines, defied every TA “system” be it Fibonacci, Candlesticks, or Elliot Wave. And have left egg on the face of every permabull pundit who’s promised that “this is the big one” more times than Red Foxx promised he was “coming to see Elizabeth” on Sanford and Son.

And the reason for all that egg on the face?

Because, gold has many faces.

Sometimes it trades as a precious metal, sometimes as a currency, often as a flight to safety haven, and occasionally as a correlated trade to oil, or other commodities. The key, is to know at any given moment — how gold is trading.

If you’ve been trading gold fundamentally, against the bullish backdrop of ramping global inflation, run away US spending, and out of control deficits, a sinking dollar, unrest in the Mid East, or in anticipation of the gold:oil ratio gap closing… it’s been a roller coaster ride of late.

In trading there are two fundamental mindsets.

1. You can trade in reaction to the markets, or…
2. You can trade in anticipation of… the markets.

The market (and life) allows you three options.

– lead.
– follow.
– get the #@$% out of the way.

And in “this” gold market… you’d better know who’s leading, who’s following, and who’s just getting the#@$% out of the way.

Enough rant, let’s cut to the chase…

What face is gold wearing?
Who’s leading it?
What’s driving it?

The answers….

What face? — Currency.
Who? — Yen-Carry currency traders.
What? - Yen:Dollar

And in place of another 1,000 words… one chart:

Okay, so Yen/Dollar has been strongly correlated to gold since December. What about the long term, and what about the very short term?

Long term? How about the last two years…

Short term? How about this little pop off the recent pullback?

Yen:Dollar led gold on this most recent “turn”…

If you want to get off the whipsaw gold rollercoaster, put away the pom poms, turn of the permabull pundits, and start trading like a Pro, instead of a Joe.

Mo later,

SliderOnTheBlack