Quantifying the Price Trend for Gold

 “That’s GOLD Jerry! GOLD!” – Kenny Bania (Seinfeld)

There’s a lot of discussion currently taking place about the direction of Gold. At 1215, it’s currently at it’s lowest point for 2014 and headed for its 1 year low of 1191 hit last December.

There is little positive news or conviction to long side, and the momentum in bearish news is compelling:

• · Fed last week reiterated its commitment to keeping rates low for now
• · S&P 500 is at record highs – According to Bloomberg, net long positions in futures and options fell for a fifth straight week
• · Shorts bets are at their highest point since June

As usual, the best way to get a gauge on how Gold is likely to trade, say in the next month, is to see how it has traded in similar environments historically. Capturing these actual distributions, vs normal distributions, provides an objective view and predictive analytics on the range of return probabilities.

For Gold, the first step is finding historical environments measured as statistically similar.  Next, is finding enough instances of this current environment to be statistically significant.  We took the current 3 month price trend, and found 60 similar instances dating back to 1975.

In 65% of the instances, Gold is up in the next 1 month and the average return is 1.9%.

Have a great week!

Replicating the Market Call (Clients Only)

• ·  Simply type in the symbol and hit the 3M-1M button for the projection
• ·  Scroll down to capture historical comps, and for further detail and transparency supporting the analytics