Monday, 25 February 2013

Gold's Long Term Chart

I made mention of this in my article about how Gold prices really started to diverge around 2004 or so.  A very important thing to do when you make use of trends and other similar indicators is that they are only accurate until they change.  Like the saying goes, the trend is your friend until its not. When the data changes significantly such that the old formulas and trends don't work anymore, you have to recognize that its systemic and change your models to fit it.

Below is the long term chart for Gold from 1979-present.  You can see how for a long time, Gold was in a pretty consistent trading range except for the relatively minor spike in 1980.  It went along peacefully until around 2004ish when it skyrocketed.

(Note: Click the graphs for the full resolution)

To make it easier to see, I broke out the two periods into small charts so you can see the trends inside those periods.

And here's the post-2004.  You can see that the inflection point really started in late 2005 and that the biggest jump was from Oct 2008 till August 2011 where it jumped from ~$750 to ~$1850, a 150%+ jump.

Below are the table's showing the average and median performance for the pre and post 2004 death and golden crosses.  You can see there's a big difference in divergence between these two periods.  I highlighted the 6 month difference in particular.

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