Wednesday, November 4, 2015

Gold Follows Commodities Except For Periods of Dislocation

Commodities
Computer analysis of gold and commodities suggests a fairly tight correlation since 1971. A visual comparison of gold and commodities' trend oscillators (Au LTCO and CRB LTCO) clearly shows only subtle differences within highly comparable trends since 2000; this comparison can be extended as far back as 1971 (chart). If gold is money as many argue, then commodities, following a similar trend over decades, must also be 'considered' money. While gold's trend often disconnects from commodities during periods of panic - political, social, and economic dislocations, it generally returns to the means after the crisis.

This will burn a lot of buyers of gold that fail to sell once the panic is over.

Chart


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