Dust flux, Vostok ice core

Dust flux, Vostok ice core
Two dimensional phase space reconstruction of dust flux from the Vostok core over the period 186-4 ka using the time derivative method. Dust flux on the x-axis, rate of change is on the y-axis. From Gipp (2001).

Sunday, December 15, 2013

Gold-USDX breaks down

Last time we looked at a chart showing the decline of both gold and the US dollar in tandem. Today we consider their product (that is, USDX x gold price) as a possible driving factor for the performance of gold equities. For a gold producer outside the US, this product reflects the value of its product.

And there are a surprising number number of countries in which the US dollar is not the official currency.

If, as is commonly thought, the US dollar and gold are inversely correlated, there will be no major change in this product through time. This chart shows us otherwise.

Gold-USDX rose from lows in late 2008 to gold's spike top of over $1800 in late 2011, remained consistently high until late 2012 then dropped off a cliff in April, bouncing off the bottom in July and October.

GDX, which I am using as a proxy for gold producers, rose in tandem with Gold-USDX from late 2008 until early 2011, slowly declined to late 2012 (when gold-USDX was stable), and fell quite sharply until the bounce in gold-USDX in mid 2013.

One note about the bounce--I'm not a big fan of simple TA, but will note that the level at which the bounces occurred is exactly 1000. And unfortunately, as of last week, the gold-USDX penetrated the 1000 level to the downside. Merry Christmas!

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