The Enigmatic Case of Gold: A Multifaceted Analysis
Gold has been a store of value for thousands of years, but its complexities often leave investors and analysts perplexed. This week’s stock analysis delves into the intricacies of gold as a commodity, currency, and potential wealth creator through mining companies.
Most mainstream economists and analysts view gold with disdain, labeling it an "unproductive asset" due to its inability to pay interest or yield dividends. However, when interest rates approach zero percent, this perspective becomes increasingly dubious. The recent move by Berkshire Hathaway to take a significant position in Barrick Gold (GOLD) has left the investing community bewildered.
To truly comprehend gold’s behavior, one must adopt a multifaceted view, considering its value as both a commodity and currency. Americans often overlook how gold performs when priced in foreign currencies, which can provide valuable insights into its purchasing power.
Valuing Gold as a Currency Analysis
Gold has historically proven to be a reliable store of value over time, maintaining its purchasing power despite inflationary pressures. To objectively evaluate gold’s performance, we must compare it to major foreign currencies over the past decade.
By examining the color-coded performance metrics below, we can see that gold has outperformed most major currencies, demonstrating its stability as a currency.
| Currency | 10-Year Performance |
| — | — |
| USD | UP |
| EUR | DOWN |
| JPY | DOWN |
| GBP | DOWN |
| CAD | DOWN |
Gold’s resilience against inflation and currency fluctuations makes it an attractive asset for traders looking to hedge against market volatility.
Valuing Gold as a Commodity
Comparing gold’s return on investment (ROI) to major stock market indexes reveals that, while stocks have outperformed in the past year, gold has kept pace with half of the broader stock market indexes. This balance indicates a relatively stable and less volatile asset.
| Index | 1-Year ROI |
| — | — |
| S&P 500 | +14.6% |
| Dow Jones Industrials | +6.6% |
| NASDAQ | +7% |
| Russell 1000 | +12.66% |
| GOLD | +8.19% |
Best Case – Worst-Case Scenarios
Studying the long-term 52-week chart allows us to identify potential best-case and worst-case scenarios, providing a risk-reward perspective for investors.
The drawdowns in the gold market over the past year have been relatively mild, with a peak-to-trough decline of 12.68%. This stability suggests that gold’s downside is currently limited.
Vantagepoint A.I. Analysis
Using VantagePoint Software and artificial intelligence (A.I.) helps traders stay on the right side of trends by monitoring predictive indicators. The slope of the blue line in the chart below indicates a strong uptrend, while the Neural Net Indicator suggests future strength.
Comex Gold with Vantagepoint A.I. Triple Cross
Power Traders use the predictive blue line and neural network indicator to create optimal entry and exit points. Double confirmation signals occur when both indicators suggest the same future outcome, providing statistically sound trading opportunities.
Intermarket Analysis
The unique ability of VantagePoint Software to perform intermarket analysis allows traders to locate key drivers of price for the underlying asset they are trading. By studying charts, we can identify invisible factors that have high statistical correlations with gold’s price movement.
Highlighting positively correlated gold mining stocks to the price of GOLD provides a valuable analytical tool for traders. This power is accessible at your fingertips with intermarket analysis.
Conclusion
While gold is not yet in an official bull market, its resilience as both a commodity and currency makes it an attractive asset for traders. We urge all traders to practice good money management and allow the artificial intelligence to guide their decision-making process.
As aggressive traders who are option savvy consider selling GOLD put options, we also recommend doing a similar analysis on gold mining companies. Their future is expected to be very bright.
Disclaimer
THERE IS A HIGH DEGREE OF RISK INVOLVED IN TRADING. IT IS NOT PRUDENT OR ADVISABLE TO MAKE TRADING DECISIONS THAT ARE BEYOND YOUR FINANCIAL MEANS OR INVOLVE TRADING CAPITAL THAT YOU ARE NOT WILLING AND CAPABLE OF LOSING.
VANTAGEPOINT’S MARKETING CAMPAIGNS, OF ANY KIND, DO NOT CONSTITUTE TRADING ADVICE OR AN ENDORSEMENT OR RECOMMENDATION BY VANTAGEPOINT AI OR ANY ASSOCIATED AFFILIATES OF ANY TRADING METHODS, PROGRAMS, SYSTEMS OR ROUTINES.