Thursday, January 5, 2017

In The Long- Term Gold Has Been Stronger Than The US Dollar

Contrary to what the gold bears think, in the long - term the gold has been stronger than the US dollar. Look at these three charts (as of the end of January 5, 2017):

1. US Dollar:

For better comparison, I have plotted the inverted US dollar index . The inversion means that if the US dollar index goes up, the inverted chart line goes down.

Since December 2015 the US dollar has strengthened so the blue arrow has been in its downward trend.  

2. Now, gold:

As a rule, if the US dollar index goes up (or the inverted US dollar index goes down - chart 1) gold should go down as well. However, the chart shows that since December 2015 the gold has strenghtened (the blue arrow has been in its upward trend).

3. Next (and the last) chart - golddollar index (the definition of the golddollar index is here):

Similarly to gold, the goldollar index has been trending up since December 2015. However, this index has been even stronger than the gold itself. Simply put, the gold expressed in other currencies (than the US dollar) shows extra strength.

Summarizing - the gold bears are looking for lower gold prices but gold is showing its intrinsic strength...

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