nnuut
01-22-2014, 11:23 AM
This will strengthen the dollar, I think a strong dollar is the key!:cool:
Mark Hulber (http://www.marketwatch.com/Search?m=Column&mp=Mark%20Hulbert)t (http://www.marketwatch.com/Search?m=Column&mp=Mark%20Hulbert)
Jan. 22, 2014, 6:16 a.m. EST
The incredible gold-interest rate correlation
Opinion: One model pegs gold’s fair value at $800 an ounce
And if that yield rises to just 4%, from its current 2.8%, gold will still plunge — to $831.
Those sobering forecasts come from an econometric formula based on the last decade’s relationship between gold and interest rates (http://www.marketwatch.com/Subjects/Interest_Rates?lc=int_mb_1001). Assuming this past is prologue, the only way for gold to make it back to its all-time high above $1,900 an ounce is for the 10-Year Treasury yield to fall to 1%.
To be sure, a comprehensive model of gold’s price needs to include more than just interest rates. But, according to Claude Erb, who conducted these statistical analyses, we should not be too quick to reject his simple “behavioral” model relating gold’s price to the 10-Year Treasury yield. Erb is a former commodities portfolio manager for Trust Company of the West and the co-author (with Campbell Harvey, a Duke University (http://www.marketwatch.com/organizations/Duke_University?lc=int_mb_1001) finance professor) of a recent National Bureau of Economic Research entitled “The Golden Dilemma.” (http://www.nber.org/papers/w18706)
The incredible gold-interest rate correlation - Mark Hulbert - MarketWatch (http://www.marketwatch.com/story/the-incredible-gold-interest-rate-correlation-2014-01-22)
Mark Hulber (http://www.marketwatch.com/Search?m=Column&mp=Mark%20Hulbert)t (http://www.marketwatch.com/Search?m=Column&mp=Mark%20Hulbert)
Jan. 22, 2014, 6:16 a.m. EST
The incredible gold-interest rate correlation
Opinion: One model pegs gold’s fair value at $800 an ounce
And if that yield rises to just 4%, from its current 2.8%, gold will still plunge — to $831.
Those sobering forecasts come from an econometric formula based on the last decade’s relationship between gold and interest rates (http://www.marketwatch.com/Subjects/Interest_Rates?lc=int_mb_1001). Assuming this past is prologue, the only way for gold to make it back to its all-time high above $1,900 an ounce is for the 10-Year Treasury yield to fall to 1%.
To be sure, a comprehensive model of gold’s price needs to include more than just interest rates. But, according to Claude Erb, who conducted these statistical analyses, we should not be too quick to reject his simple “behavioral” model relating gold’s price to the 10-Year Treasury yield. Erb is a former commodities portfolio manager for Trust Company of the West and the co-author (with Campbell Harvey, a Duke University (http://www.marketwatch.com/organizations/Duke_University?lc=int_mb_1001) finance professor) of a recent National Bureau of Economic Research entitled “The Golden Dilemma.” (http://www.nber.org/papers/w18706)
The incredible gold-interest rate correlation - Mark Hulbert - MarketWatch (http://www.marketwatch.com/story/the-incredible-gold-interest-rate-correlation-2014-01-22)