This chart is meaningless

I am very sorry to be picking on this article, but others have been saying much the same thing so this may be worth a brief mention.

(I did look around sharelynx a bit, but didn't find it).

The contention is that the creation of new debt in the past couple of years must bring about an increase in the gold price. This conclusion is supported by an illusion which is fostered by the purely arbitrary choice of a scale for the gold price. Unfortunately I am too lazy to go and put the data for these time series together so you will have to follow along with the plots I have below.

We compare the production of bedknobs from broomsticks with the production of broomsticks from bedknobs.

From this graph, we can see that bedknob and broomstick production grew more-or-less in tandem, until recently, when bedknob production suddenly fell. You would use this graph to support your prediction of an increase in bedknob production.

Same data, but with a slightly different scaling for bedknob production. You could use this graph to support your contention that there was a bit of a blow-off top in bedknob production in the recent past, but it is now back in line with broomstick production, in which state you expect it to continue.

Same data, different scaling. Here, not only was there a recent blow-off top in bedknob production, but it is quite clear that bedknob production still has further to fall to come back into line with broomstick production.

You can do the same with the chart at top. Whatever story you want to push--gold to rise; gold to fall; gold to stay the same--all you have to do is change the scale accordingly. Hence the title of this post.

This graph is seductive because it does seem logical that increasing the creation of debt and money should increase the gold price. But we don't know what the correct relationship is, so have no real way of stating whether gold should rise, fall, or remain neutral from these data alone.