The 1 year "correction" in gold is an illusion.The POG is...

The 1 year "correction" in gold is an illusion.

The POG is holding up surprisingly well around the $1570-1590 mark (well above 1525-1530 support of May 16) despite the US dollar rising from 81 to 84 over the same period.
We keep hearing about a fall in the POG and that it may signal the end of the bull market for gold and therefore our gold stocks.
If we thought it was true, most of us would re-think our holdings in gold stocks so this is a very important question for us.
As I see it, the POG is actually very strong and only APPEARS to be correcting as a result of money flowing out of some currencies and into others including the US (and our AUD).
In those currencies not being temporarily pushed higher, there is NO gold price correction, just a sideways consolidation after a steep climb a year ago.
In fact in India, the POG is higher now than it was when it peaked for US investors at $1900.
So when you hear people tell you the gold bull is over and you should sell your gold stocks, take a look at the strength of gold ignoring the recent flight to the US dollar (and AUD) which will not last forever (charts below).
When the US dollar stops rising against other currencies, the POG should rapidly rise back up to its long term trend.
At the same time it actually has room to fall against the Brazilian Real and Indian Rupee (if those currencies rise after recent weakness) and still stay in its long term up trends as measured in those currencies. It is clearly holding well above the long term trend lines in those currencies and above the trend line in the much larger Euro.

Our dollar is also up on safe haven buying, but any further slow down in commodity prices should cap our dollar or drop it while gold continues to rise and that will be a big positive for the Australian gold sector in general.

Look at these charts including the Euro and its clear the POG is in a very powerful uptrend. Forget the illusion created by the temporarily inflated US dollar.