Saturday, March 27, 2010

Kitco Gold Index ~= GLD:UDN

I need to give credit where credit is due. The Kitco Gold Index is where I got the idea of factoring out the effect of USD currency fluctuations from the real supply-demand curve. This can easily be done by plotting a ratio of the equity to UDN. In my previous post I showed you the true picture for GLD and GDX. To show you that this methodology is valid, let's compare a chart of the Kitco Gold Index to my chart:

For a more direct comparison, I'll first show a daily line chart:

However, I prefer to use plot 3 EMA's to smooth out the "noise":

It's not an exact match to the Kitco Gold Index because I am using slightly different data. I am using data that is available to the "common" man - simple ETF's which won't mirror the underlying instrument exactly. However, as you can see, the GLD:UDN chart is pretty close to the Kitco Gold Index.

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