decoupling of gold vs dollar (introduction), page-13

Decoupling of Gold vs USD

Chapter 1

More actual observations
Following the jump of gold in September 1999, it`s price decreased again, about down to it`s level before the announcement, and for two years (remember 2 !! years)nothing of importance happened to the gold market, at least as far as I know.

Then, all of a sudden, so to speak, JS came back to the gold scene, talking to the public. And he again was laughed at!! He told the public (Ocober 2001, that is two years from 1999): Gold has reached its bottom (big laugh of the audience) and Gold will now rise and reach 1650 USD, at least (even bigger laugh).

(Some time before, JS came back to gold and founded his own gold mine in Tanzania, but this is a separate story)

Indeed, gold from that very day on did rise and never got back to the bottom level, declared by JS. During it`s rise, gold kept the usual high (0,96) negative correlation to the dollar (the EUR/USD curve). But only until Mai/June 2005. From then on, Gold started to decouple. First slowly, then more and more rapidly. This phenomenon, to the best of my knowledge, has not been recognized by the public (but see Chapter 3, with discussion about kitco.com).

Until today, from 2005 on, this decoupling has already reached a tremendous level: Gold has increased about 170% more compared to the devaluation of the USD (in percent) during the same period of time. This seems to be a somewhat abstract figure.

However, for better understanding, one should consider that if gold would have reached it`s current level with a dollar still within the "old" close negative correlation to gold, the dollar would have been devaluated by the 170%, which means that we would have 4,05 EUR/USD (!!!) instead of 1,5 as of today!!!! Think about it (and see chapter 3 - implications of the decoupling).

The first big up-leg in gold started in 2005, lasting for about 6 months, giving an increase of 60% in Gold.
Two years later, in 2007, a second move came in, lasting, who wonders, for 6 months, giving an increase of, again, 60% in gold.
Two years later, in 2009, the next move is on it`s way - lasting 6 months/giving plus 60% ???

Two years - just an accident? By no means, as I will clearly proof. Every now and then (??) something happens to the gold market, especially at, as I may simply call them, D-Days (a term out of the war history).

This part of the story will be dealt with in chapter 2 - very special observations.

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