Interesting post from Crossing Wall Street
I was playing around with some data and I came with an interesting stat: All of the stock market’s gain since 1970 has come when the price of gold is below $455.
OK, now let me explain a little. I took two monthly files; one with the closing price of gold from 1970 though this past May. The other with the dividend reinvested index for the S&P 500 over the same time period.
I then looked at how well the S&P did based on the closing price of gold for the previous month. The results show that the index was net flat whenever gold closed the previous month higher than $455.50.
Not sure about cause and effect but a fascinating piece of information nonetheless.
I wonder what would happen to the stock market if gold were to go to $5,000?
Gold breached $455 in 10/05, continued rising...along with the SPX, which then fell late '07...followed by gold, the market for kitchen tables and everything on the planet except T bonds.
Correlation with monthly closings...what is it good for?
As for gold $5k, SPX fell during gold's jump early 70s...followed '75-'78...diverged during the metal spike '79-'80.
So the answer clearly is...hmmm.
Seasonality favors gold now. The quadruple top looks to cynical eyes a lot like the "81 chart.
Posted by: RunningAmokInFantasyland | August 22, 2009 at 05:49 PM
Hmmmm.......
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Posted by: jack | August 27, 2009 at 07:41 AM
Gold is on an uptrend. Dollar and Gold are negatively correlated. Gold and currencies make a very good trading combination. Both hedge each other. Read more here:
http://forex-or-stocks.blogspot.com/
Posted by: Ahmad | August 30, 2009 at 04:23 AM