Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (18252)

5/10/2016 9:33:57 AM

From: Goose94

Read Replies (1) | Respond to of 205489

This Index Almost Always Shows When Gold Will Rise

Absolutes are rare in investing, but this one comes pretty darn close.

Most investors instinctively know that gold tends to rise when bad news hits the economy. Gold is essentially the “fear” trade. When fear spikes, investors flock to the precious metal and push the price higher.

One of the better measures of fear is the VIX (CBOE volatility index). It is a widely used measure of market risk and is often referred to as an investment “fear gauge.”

So, it shouldn’t be too surprising that when the VIX jumps, gold does, too. And that’s exactly what’s happened since 2001.

Look at how gold has performed every time the VIX exceeded a reading of 30.

DateVIXGold’s Performance
6 Months Later

9/28/2001	31.93	3.2%
10/31/2001	33.56.	10.3%
7/31/2002	32.03	21.3%
8/30/2002	32.64	11.9%
9/30/2002	39.69	4.3%
10/31/2002	31.14	6.5%
9/30/2008	39.39	5.6%
10/31/2008	59.89	22.7%
11/28/2008	55.28	19.7%
12/31/2008	40.00	5.0%
1/30/2009	44.84	2.8%
2/27/2009	46.35	0.9%
3/31/2009	44.14	9.6%
4/30/2009	36.50	17.7%
10/30/2009	30.69	12.8%
6/30/2010	34.54	14.4%
8/31/2011	31.62	-7.1%
9/30/2011	42.96	2.7%
Average Return:		9.1%

Gold went down six months after the VIX hit 30 only once. All the other 17 times gold was higher, and it rose by double digits eight of those times. The average return was 9.1%.

The VIX hasn’t hit 30 since September 2011. But the history suggests that when it does—and sooner or later it will—the gold price will rise.

Hard Assets Alliance Team