"take delivery as soon as possible", page-6

Dillinja

What does this table tell us (apart from the fact that the quant team at Deutsche Bank who contrived it have too much time on their hands)?

The broad assumption is that the combination of Fed asset holdings and Chinese reserves are positively correlated to the price of gold.

The causal connection is less obvious.

I can see that increases in Chinese reserves might have been invested in gold. If that had happened gradually since 2002, it might make sense. But it didn't happen that way. The major reallocation of Chinese reserves to gold didn't really get underway until 2011.

That leaves the Fed Balance Sheet.

Up until 2008-9, the Fed BS reflected the impact of inflation. If gold is seen as an inflation hedge, the high correlation makes sense. However the increase in Fed held assets associated with TARP and QE doesn't appear to produce a predictable change in the POG. It is particularly odd that at time (2011-2012) when the Fed BS + China FX metric stablises, that the POG goes crazy.

This chart isn't very useful. Well done Zerohedge...