Gold is a classic measure of value
Gold's use as money since the dawn of times makes it an important yardstick to measure the relative strength of different asset classes.
A look at the charts below shows Gold outperforming Bonds, Stocks and Commodities since the year 2000, except for Oil which is still
outperforming Gold (more here). The rhythm of the cycles suggests Gold will continue to
outperform these asset classes, except Oil until late 2006. This can be accomplished with Gold moving up and/or Bonds and Equities
selling off. Inflation may be the catalyst to set this in motion since it usually pushes Rates and Gold up, while rising Rates and
Inflation are likely to push down Equities. Since Summer 05, long term Rates are on the rise and probably reacting to Inflation
concerns, Gold could follow soon.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com
Gold can be used to measure Currencies
The following charts show Gold at 10-25 year highs depending on the Currency and shows their strength as follows: CDN dollar,
Pound, Euro, Yen, and US Dollar.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com