Interest Rates and Gold 200 Day Intervals

Thanks to freestockcharts.com, they have a neat tool that permits you to make a chart and then scroll along over time looking at 200-day intervals.  So I created a chart of the Gold ETF “GLD” (a good proxy for the price of gold) and the yield on the 2-year treasury and took three snap shots.

The first graphic below shows an almost perfect correlation between the price of gold and rates. Just opposite of what everyone says–that gold prices go up when interest rates decline.  Not in this chart.

Interest Rates and Gold - Near Perfect Correlation

 

During this next 200-day period, we see what the experts tell us is “the way it is.” Interest rates declining and a bullish price of gold.

Interest Rates and Gold--the Inverse Correlation

Next, let’s look at this 200-day period below where there seems to be no correlation at all.  Interest rates blasted off while the price of gold meandered at the same level. (Experts say that if rates go up now, gold will fall).

 

Interest rates and Gold - NO Correlation

 

 

 

You can now stop listening to what the experts tell you about the relationship between interest rates and gold because rather than opinion, you now have the data.  Sometimes the two are positively correlated, sometimes negatively correlated and sometimes not correlated.  But for the rest of your life, experts will continue to proclaim that one influences or is predictive of the other.