I have used the product of the gold price and the US dollar index as a metric for the profitability of (most) gold companies. I divide the product by 100 to end up with a convenient number.
Conventional thinking would have it that gold goes up when the US dollar goes down. If that were the case, this graph would consist of a straight horizontal line. Increases in this product represent times when non-US gold miners make more money. If the US dollar rises, and gold remains constant, the mining company outside the US with expenses in local currency benefits, arguably more than they would by a rise in the gold price, which is often accompanied by special windfall taxes.
As seen in other posts, the long-term trend over the past ten years has been a rise in both the gold price and the US dollar. But there is a lot of noise.
Today's chart is a simple look at the level of gold price x USDX since the beginning of 2012.
It looks to me like a setup for a big move, perhaps up by 400 points, which would bring the index close to 1600. For the record, the previous all-time high was 1448.
Conventional thinking would have it that gold goes up when the US dollar goes down. If that were the case, this graph would consist of a straight horizontal line. Increases in this product represent times when non-US gold miners make more money. If the US dollar rises, and gold remains constant, the mining company outside the US with expenses in local currency benefits, arguably more than they would by a rise in the gold price, which is often accompanied by special windfall taxes.
As seen in other posts, the long-term trend over the past ten years has been a rise in both the gold price and the US dollar. But there is a lot of noise.
Today's chart is a simple look at the level of gold price x USDX since the beginning of 2012.
It looks to me like a setup for a big move, perhaps up by 400 points, which would bring the index close to 1600. For the record, the previous all-time high was 1448.
Just a quick note that this forecast was a smashing success, with the index hitting 1742 in mid-May, 2020
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