Inflection Points For Gold
By Gold Money
By Stefan Wieler and Josh Crumb from GoldMoney.com
The full report can be accessed here
as PDF
Inflection
Points
Introduction
Gold prices
in USD have rallied strongly in recent weeks, up 18% year-to-date. Gold prices
in other currencies look similar; of the 20 most traded currencies in the
world, gold is up in all of them. In the media and in finance, as with most
exchange-traded commodities, gold is almost always quoted in USD. Hence, as
gold prices in USD moved lower over the past year, many remained under the
impression that gold was in a downtrend. However, when we look at gold priced
in the 20 most traded currencies in the world, in 80% of them, gold showed a
positive performance over the past two years. But does that mean gold in these
currencies has resumed its long term upward trend? In order to find that out,
we have created a set of intuitive rules to define inflection points at which
gold prices decisively change direction. We find that in 55% of the world’s
most traded currencies, gold has re-entered a clear uptrend.
Gold prices
in all currencies saw their peaks somewhere in 2011. What followed then was a
more or less sharp decline, but unlike for gold priced in USD, gold priced in
most other currencies troughed in late 2013 to early 2014 and has been trending
higher since. We find that for the world’s major currencies, uptrends tend to
last about 4.5 years on average during which gold prices increase by more than
100%. 95% of the world population does not use the USD as local currency and is
not paid in USD. Saving in gold has helped them to protect their wealth as
their currencies resumed their long-term decay. In the end, this is the path
all fiat currencies follow as their purchasing power declines. Gold is the only
money that has held its purchasing power over time. Indeed it is the only money
that has survived throughout history.
While the
USD and a few other currencies have so far been the outliers, prices have
reversed sharply as well. Applying our set of rules to the USD, we find that
gold has entered an uptrend as well as long as prices remain above $1165/ozt,
roughly USD100/ozt below current levels. Historically USD gold uptrends lasted
over three years and pushed gold prices up more than 200%.
Inflection Points
Gold prices rallied strongly in recent weeks in all major
currencies. In the 20 most traded currencies, gold is up between 13% and
23%year-to-date (see Figure 2). Unprecedented central bank action had pushed
gold priced in USD to an all-time high in 2011 but since then gold prices
trended down as longer dated energy prices …read more
Source: Inflection Points For Gold
