GOLD, Gold and XAUUSD - page 7

[prostotrader]

Sergey Chalyshev:

It is unclear why gold should fall, I get this picture:

The cost of gold in rubles:

The fact is that the value of gold is tightly linked to the dollar index.

Right now, the dollar index is 95.17, which is a VERY low value for the recent past.

There are times when the index goes up and gold goes up, which indicates that there is potential for growth, BUT

As soon as the index rises above, gold starts to fall sharply (profit taking and cash out)

Added

Here is an interesting article about gold

http://www.forbes.ru/finansy-column/rynki/274221-pochemu-tsena-na-zoloto-mozhet-upast-nizhe-sebestoimosti-dobychi

[Vasiliy Sokolov]

prostotrader:

The fact is that the value of gold is tightly linked to the dollar index.

...

Can you justify this mathematically? At least at the level of correlation?

[prostotrader]

Vasiliy Sokolov:

Can you justify this mathematically? At least at the level of correlation?

It's strange, Vasily, that you need to explain this...

http://golden-inform.ru/investicii/ot-chego-zavisit-cena-na-zoloto/

Added

The value of gold is denominated in dollars, hence

Cheap dollar means expensive gold, and vice versa.

[Vasiliy Sokolov]

prostotrader:

It's strange, Vasily, that you need to explain this...

http://golden-inform.ru/investicii/ot-chego-zavisit-cena-na-zoloto/

Added

The value of gold is denominated in dollars, hence

A cheap dollar is expensive gold, and vice versa.

You are our "Captain Obviousness"!

And if I write on the fence that the price of gold depends on solar cycles, and silver - on the phases of the moon - would you believe me?

Of course the price of gold, just like any other commodity, including currency, bitcoins, indices etc. is denominated in dollars. And of course gold correlates with all other mental and not mental instruments in the world, including the notorious dollar index. However this correlation is very weak and specific. Therefore, it is safe to say that the value of gold is directly dependent on the dollar index.

[prostotrader]

Vasiliy Sokolov:

You are our "Captain Obviousness"!

And if I write on the fence that the price of gold depends on solar cycles, and silver - on the phases of the moon - would you believe me?

Of course the price of gold, just like any other commodity, including currency, bitcoins, indices etc. is denominated in dollars. And of course gold correlates with all other mental and not mental instruments in the world, including the notorious dollar index. However this correlation is very weak and specific. So it's safe to say that the value of gold is directly dependent on the dollar index.

Well said, but why?

Where are your arguments that this is not true?

[Vasiliy Sokolov]

As a first approximation:

> lmd <- lm(tbl$ED.F~tbl$GOLD.F)
> summary(lmd)

Call:
lm(formula = tbl$ED.F ~ tbl$GOLD.F)

Residuals:
      Min        1 Q    Median        3 Q       Max 
-0.047555 -0.019711 -0.002173  0.019627  0.047391 

Coefficients:
             Estimate Std. Error t value Pr(>|t|)    
(Intercept) 0.8181715  0.0249617   32.78   <2 e-16 ***
tbl$GOLD.F  0.0002259  0.0000200   11.29   <2 e-16 ***
---
Signif. codes:  0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 0.02369 on 319 degrees of freedom
Multiple R-squared:  0.2856,    Adjusted R-squared:  0.2834 
F-statistic: 127.6 on 1 and 319 DF,  p-value: < 2.2 e-16

The p-value is low and the dependence is there, but weak.

This test does not prove that gold is directly dependent on the dollar, but says the obvious: all instruments in the market are correlated with each other to a greater or lesser extent.

[prostotrader]

Vasiliy Sokolov:

As a first approximation:

The p-value is low and the dependence is there, but weak.

This test does not prove that gold is directly dependent on the dollar, but it says the obvious: all instruments in the market are correlated with each other to a greater or lesser degree.

Cool!

Keep up the good work!

And I will use this data:

[Mikhail Simakov]

Vasiliy Sokolov:

As a first approximation:

The p-value is low and the dependence is there, but weak.

This test does not prove that gold directly depends on the dollar, but says the obvious: all the instruments in the market are correlated with each other to some extent.

Vasily, Larry Williams wrote about the relationship between gold and the dollar index.

[Vasiliy Sokolov]

Mikhail Simakov:

Vasily, your idol Larry Williams also wrote about the relationship between gold and the dollar index

I have no idols. But I respect Larry as a trader. And he wrote about this dependence on a more sensible and technical level than the enthusiastic Mikhail does. I don't deny the dependence of gold on the dollar index, but what Misha shows are two different charts superimposed on each other.

[prostotrader]

Vasily, how do you determine the dependence of one and the other?

That's exactly what everyone does - superimpose one graph on top of the other.

If that's more familiar to you, you're welcome...