Simpleviewsgold.com
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| A Real Weather Gold Barometer |
Gold Barometer
The Gold Barometer is constructed
from a few simple parameters among which by far the most important is the Real Fed Fund rate. The latter is plotted inversely
and historically has coincided with the ups and downs of Gold prices. In addition to actual data, the Barometer is constructed
with data projected three to six months ahead using reasonable estimates of its component parameters. Thereafter it is regularly
updated as actual data become available. The projections are intended to capture as much as possible inflection points or
trend changes that may occur in the near to intermediate term.
For instance, the new up trend of Gold prices since August
2007 was correctly foreshadowed by the Barometer in early 2007. ********************************************************************************************************
The Gold Barometer was updated with new projections for the next 4 months to reflect the recent sharp rise in interest rates and the probability that the Fed won't cut interest rates further after this month. As a result near the Barometer, after surpassing the 2003 high established under Mr. Greenspan, has begun a gradual decline. It took two years (2001-03) for the Barometer to rise to its high, but just 10 months to surpass that high under Mr. Bernanke. The pace of Gold's appreciation during the two periods closely matched the relative speed and amount of the Barometer's rise.
As long as the Barometer remains in strongly bullish territory, albeit with lower readings, the uptrend in Gold is expected to continue. In the previous cycle, it took several years before the Barometer fell into bearish territory in 2006 and for Gold to sustain a significant decline at that time.
| Gold Barometer - Data as of April 25, 2008 |
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