Gold Model Sell Signal 2/19/21
The gold model is based on whether the price of gold is above or below its 12-months moving average on the 19th of the month or on the first trading day after the 19th. The MA on 2/19/21 was $1800.32, and the London PM fix for gold was $1786.20. So the model buys gold at that price. It was last bought at $1279.55 on 1/19/19. So that was a very nice gain
I did not run the regression model for gold price against the CPI, but last month the linear regression indicated that if gold were at its historical average price vis-a-vis inflation the price should be $1219. The log regression gave a fair price as $1049. The actual gold price has been above fair value for many years, but real short-term interest rates have been negative for many years.
It is curious that with fears of inflation rising, gold has not been rising. Perhaps the gold bugs are switching to cryptocurrencies? Faithless.
The MA12 is calculated every month. If the gold price goes back above the MA, gold will not be bought until it is less than 1.5 standard errors above the linear regression line. Currently that price is $1540. Notice that the price at which gold was last bought on 1/19/19 was well below that.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.