The gold price is a complicated beast. It’s like a seesaw, with gold sitting on one seat.
But instead of one seat across from it, there are several, because each country has its own currency. Those currencies go up and down with regard to each other.
Years ago, a brilliant analyst found that you couldn’t use any single currency to figure out bull or bear markets for gold. Instead, we needed to use the price of gold in a basket of currencies.
If the price of gold moved in one direction across all those currencies, then we could find the direction of the actual gold market.
Beyond the Dollar
We know that the price of gold is up in U.S. dollar terms, as you can see in the chart below:
As we can see in the chart above, gold hit its highest price since October 2016. It looks like gold is in a bull market.
However, the U.S. dollar is also weakening against other currencies. To determine if this is a real bull market, we need to look at the gold price in terms of a basket of currencies.
The chart below shows the gold price in six currencies: U.S. dollar, British pound, Chinese yuan, Japanese yen, the euro and the Swiss franc.
What we can see is that the price of gold rose in all six currencies since its low in July 2017.
That means we are in a bull market. It’s time to buy gold and gold stocks.
Editor, Real Wealth Strategist