GB, I suspect ever since the "new" method of stimulating...

GB,

I suspect ever since the "new" method of stimulating economic activity using unconventional tool, QE, the results have been unpredictable so far from its short history. I appreciate the gold relationship is a complex one and can be reactive to economic stress or war hedge, inflation hedge, weak USD or any other reasons to justify one's logic in hindsight essays.

I want to make it simple so I can plot a course of action by using binary logic. Stripping away conspiracies, I now view the negative correlation to USD. So in order to have a weak USD, the US economy must not have good growth potential (inflation) especially through the mouth piece of Yellen's language in all forms regarding informing markets of rate hike likelihood. This will imply QE4 probability increased.

However from recent history QE4 is actually stock market friendly and in this low rate fix asset returns, money will be forced to continue to seek better returns in bourses around the world. I don't know if the attractions to the US stocks will continue to attract foreign capital as they compete with other stock markets to wring out better returns. Again a complicated affair as German Bunds are zero to negative yields compared to UST 10yr.

The alternative scenario is to look at the EU economy with their QE. If indeed it can diverge from the historical US QE results and actually stimulate the economy as a whole instead of just local stocks then this can create some inflation or potentials. The result is a stronger EURO and as you said a currency with the largest weighting on the USDX. A stronger EURO will pull up GBP and with it a reversal on a mixture of fresh bulls and short coverings in the respective currencies.

This way I can see a weak USD and stronger gold price rather than the hope of stock market collapsing in US with the contagion effect affecting global markets.

The only conclusion I saw from GFC gold rally was that initial sell down was in line with stocks sell down, no alternative currency hedging of intrinsic value but QE saw the majority punting of hyper inflation potential. Coupled with the view that the safe haven asset was USD during such economic stresses, the logic that you are better off in AUD or AUD exposed real assets did not mater.

Still clueless on what and how gold can rally back to the good days.