Wednesday, February 15, 2017

Gold Is Very Strong

As a rule, when the price of gold goes up, the US dollar index goes down. And vice versa. To make things simpler, let me show the US dollar index in its inverted version. In such a case when the price of gold goes up, the inverted US dollar index also goes up. And vice versa.

Now look at the two charts below:

The upper panel shows the price of gold and the lower panel shows the inverted US dollar index.

Applying the basic rule,  both measures should go in tandem. It means that the price of gold should have gone below the point A in the way the inverted US dollar has gone below the point B. However, gold is still above the point A.

In my opinion, it is an indication of the gold's strength, which is a bullish message for gold bugs.


  1. Hi, how does gold look like if compared to JPYUSD instead of inverted USD?

  2. Gold and USD / JPY go in tandem, more or less.

  3. So does that mean that one can predict the movement of the JPY USD currency pair by studying Gold Futures?

    In other words, if a commentator correctly predicted an increase in gold price because large + small speculators on the Comex held relatively low 'longs' and high 'shorts' - would he/she have also been able to predict that the Yen would strengthen against the dollar. And if so, how can this have come about do you think?

  4. I am not in the business called "Predictions". I am in the business called "Spotting some interesting patterns".

    Unfortunately, patterns do change so you have to grasp some basics of the probability theory.

    As for a pair JPY / USD: now the pattern that JPY/USD goes similarly to gold works. Will it work tomorrow? I don't know and...don't care because I am not tracking this pattern. I prefer the US dollar index and Gold. Why? I recommend this link: