Fun with Numbers and Gold

By: Adrian Ash | Fri, Oct 8, 2010
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Three ways of looking at gold's current bull market...

YOU MIGHT know this chart already. If not, expect to see more of it soon.

It shows gold priced in Dollars per ounce across what the TV anchors would call the "very" long term...

Gold in USD/oz

As the gold story goes mainstream (the BBC news apparently quoted gold prices alongside its cursory glance at the FTSE and Dow last night), that long-term shape in Dollar-gold is due for ever-more comment.

To get a little perspective, you might also want to look at gold from another angle. Such as this one...

Gold in USD/oz

Seen from the Euro-end of the telescope, gold's current bull market didn't really get started until 2005, rather than its 2001 start in Dollars.

All told, in fact, gold priced in Euros didn't really go anywhere - net-net - for 15 years starting 1990. You can see that Dollar prices were little changed across that period, too. Whereas, over the last half-decade, the Euro-gold price hasn't shot up quite so high as Dollar-gold. Because, to date at least, the European Central Bank hasn't set about destroying its own currency with quite the same verve as the Fed.

Then again, that apparent "spike" in gold prices measured in both Dollars and Euros during 2010 is worth squinting at, too. Because those recent moves might give you vertigo when viewed across 36 years.

But unlike the 1980 spike, they're both somewhat less than vertical when viewed on a logarithmic scale.

Gold in USD/oz

Better showing the rate-of-change, this third and final chart puts the current "record-high gold!" headlines in context, at least on a numerical basis.

Gold's ascent in the Dollar clearly began earlier than it did in the Euro. But the bull market in gold (or bear market in money, depending on how you see it) has been much steadier against both than the present "frenzy" might suggest.

 


 

Adrian Ash

Author: Adrian Ash

Adrian Ash
BullionVault.com

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the head of research at BullionVault, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the secure, low-cost gold and silver exchange for private investors. It enables you to buy and sell professional-grade bullion at live prices online, storing your physical property in market-accredited, non-bank vaults in London, New York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people from 97 countries used BullionVault, owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical silver (US$129m) as their outright property. There is no minimum investment and users can deal as little as one gram at a time. Each user's unique holding is proven, each day, by the public reconciliation of client property with formal bullion-market bar lists.

BullionVault is a full member of professional trade body the London Bullion Market Association (LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development body the World Gold Council (www.gold.org) joined with the internet and technology fund Augmentum Capital, which is backed by the London listed Rothschild Investment Trust (RIT Capital Partners), in making an $18.8 million (£12.5m) investment in the business.

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