From Nick Laird care of Ed Steer:
Here are a few charts from Nick Laird on gold that I thought you might find interesting. Long-time readers will recognized these charts...especially the first one. It's current as of the end of August 2012. The previous chart I kept posting was two and a half years out of date...and a lot changed during that time. It's titled "Intraday Average Gold Price Movements". It's a 5-year rolling average of gold prices based on 2-minute tick data that runs from September 2007 until the end of August 2012. All three of these charts deserve a few minutes of your time.
(Click on image to enlarge)
As you can see, there is a definite pattern to the gold price once you average out all the daily ups and downs over such a long period of time. As I've pointed out before, there are four critical data points here...two of which stand out like the proverbial sore thumbs. They are the London a.m. and London p.m. fixes...and the two other very noteworthy points are the high tick of the day which almost always occurs at the London open, which is 9:00 a.m. GMT on this chart...and the New York high tick which, on average, occurs at the 9:30 a.m. Eastern time open of the equity markets. I would like you to make careful note regarding the precise times of each of these four data points, as they never change from year to year...ever!
There are two different slopes to this 24-hour price chart...the downward price bias from the high at the London open to the London p.m. gold fix low...and the upward bias from the London p.m. fix until the London open the following day.
Theoretically speaking, if you bought the London a.m. fix on the first business day of 1970..and sold the London p.m. fix the same day...and did that for every business day for just about 43 years, your profit/loss profile would look like the chart below. Your initial $100 investment would be worth $13.48 at the close of trading on Monday, September 24, 2012. What the chart really shows is a negative London price bias. This began in January of 1975 and, with the odd exception, the general trend has been down every year since then. Even during the biggest bull market in gold the world has ever seen...the one going on right now...gold has been negative every single year between the London a.m. and the London p.m. fix, with no exception. One has to wonder how this is possible without price management. And the answer is...it isn't.
(Click on image to enlarge)
However...also theoretically...if you bought the 4:00 p.m. GMT London p.m. gold fix...10: 00 a.m. in New York...and held that position through Far East trading and sold just before the London p.m. fix [the London open would have been better, but that's another story]...every day for the same 43 years...your profit/loss profile would look like the chart below. Your original $100 investment would have been worth $37,281 at the close of trading this past Monday.
(Click on image to enlarge)
As Nick Laird, who produced these wonderful charts, said in his covering e-mail..."The message is clear...don't #&$% with the LBMA". |
