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The Trend Is Your Friend Till It Ends

By DoctoRx, on July 26th, 2011

What countervailing forces exist to break the trend that is apparent in the charts below?  Note that these charts reflect the same trend.

 

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July 26th, 2011 | Tags: , | Category: Credit conditions, gold | 7 comments - (Comments are closed)

7 comments to The Trend Is Your Friend Till It Ends

  • Linus Huber
    July 27, 2011 at 1:12 am

    I agree that these charts show trends that make one think they are working in tandem. Linking trends can assist in investment decisions. But I would caution to assume that this link will work forever as each asset has its own combination of influences and links might break down fast, once they do.

  • DoctoRx
    July 27, 2011 at 8:06 am

    Yes, that’s when the trend ends. The gold trend ended in 1980 with an immense effort from the Volcker Fed. Wouldst we could see something approaching that commitment to at least “sort of” sound fiat money today.

  • Buck
    July 27, 2011 at 3:16 pm

    What is “the same trend” that these two charts reflect (inversely?)

  • DoctoRx
    July 27, 2011 at 8:08 pm

    The financial-economic crisis that never ended. More specifically the destruction of real capital and thus the so-far unending creation of new (counterfeit, in a way) capital by the Fed. Two sides of the same coin.

    • Buck
      July 28, 2011 at 11:52 am

      While I would more or less agree that BAC’s trend reflects “crisis” as yet unresolved (see BAC trend reversal in your prior “Bank-Rupt” for a better view), Gold has been on its current, unbroken trend a solid ten years, suggesting it is reflecting something wholly different.

      These two charts are not reflective of the same underlying dynamic. Even on the short-term window provided they are not well correlated.

  • Random Blowhard
    July 27, 2011 at 10:47 pm

    A more useful data point would have been the increase in money supply, goovenrment indebtedness and the price of gold.

    Any guesses as to what the those trends will show?

  • DoctoRx
    July 28, 2011 at 7:13 am

    Random: They all correlate, I assume with a high R2. (I think.) But unless I’m missing something, does that need to be displayed?

    And with Obama sending Daley and Geithner out this month to the Sunday talk shows to talk down the economy when they should be boasting, I suspect that the Feds will continue to be revenue-challenged and obviously there is no serious effort to cut spending.
    What do you think?