cave_guard
New Member
Also, I want to point out the AUD correlation with gold, and the dampening effect that it has on gold price fluctuations. I mention this since I noticed there are many stackers here from Australia and if you're buying gold in Australian dollars, this will have a significant impact on your gold buying/selling.
First of all, correlation is defined here:
http://www.investopedia.com/terms/c/correlation.asp
"Correlation is computed into what is known as the correlation coefficient, which ranges between -1 and +1. Perfect positive correlation (a correlation co-efficient of +1) implies that as one security moves, either up or down, the other security will move in lockstep, in the same direction. Alternatively, perfect negative correlation means that if one security moves in either direction the security that is perfectly negatively correlated will move in the opposite direction. If the correlation is 0, the movements of the securities are said to have no correlation; they are completely random."
Unfortunately, for Aussies, the AUD has been positively correlated with the price of gold. This in turn reduces gains and losses in gold price when we buy and sell gold in AUD.
A chart of the correlation of AUD with gold can be seen here:
Source: http://www.signalfinancialgroup.com/correlation/CorrelationAD.php
As you can see from the above, there have only been brief times where the AUD's correlation with gold is weak. Most of the time it's significant enough to make a difference though. Allow me to illustrate below:
This is a graph of gold in USD over the last 5 years:
This is a graph of gold in AUD over the last 5 years:
As you can see, the price of gold in AUD did not fluctuate as much as the price of gold in USD. This means we cannot profit as much when we sell gold after its price rises. Similarly though, we do not make as much loss if we sold gold after its price falls.
I can understand if Americans want to stack gold their fundamentals are much more riskier than Australia. Here's a table of debt to GDP levels of all countries from Wikipedia, unfortunately this is data for 2012 and a bit outdated, but it highlights the difference between Australia and the United States:
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt
Look under "Public debt as a % of GDP" and "Net government debt as a % of GDP" for both Australia and United States. Also, Australia holds an AAA soverign credit rating compared to the US.
The above is just pure facts and data that is relevant to your decision as an Australian (if you are one) to invest in gold. Nothing more, nothing less. If you want to buy gold, nothing's stopping you, ultimately it is your money after all.
First of all, correlation is defined here:
http://www.investopedia.com/terms/c/correlation.asp
"Correlation is computed into what is known as the correlation coefficient, which ranges between -1 and +1. Perfect positive correlation (a correlation co-efficient of +1) implies that as one security moves, either up or down, the other security will move in lockstep, in the same direction. Alternatively, perfect negative correlation means that if one security moves in either direction the security that is perfectly negatively correlated will move in the opposite direction. If the correlation is 0, the movements of the securities are said to have no correlation; they are completely random."
Unfortunately, for Aussies, the AUD has been positively correlated with the price of gold. This in turn reduces gains and losses in gold price when we buy and sell gold in AUD.
A chart of the correlation of AUD with gold can be seen here:
Source: http://www.signalfinancialgroup.com/correlation/CorrelationAD.php
As you can see from the above, there have only been brief times where the AUD's correlation with gold is weak. Most of the time it's significant enough to make a difference though. Allow me to illustrate below:
This is a graph of gold in USD over the last 5 years:
This is a graph of gold in AUD over the last 5 years:
As you can see, the price of gold in AUD did not fluctuate as much as the price of gold in USD. This means we cannot profit as much when we sell gold after its price rises. Similarly though, we do not make as much loss if we sold gold after its price falls.
I can understand if Americans want to stack gold their fundamentals are much more riskier than Australia. Here's a table of debt to GDP levels of all countries from Wikipedia, unfortunately this is data for 2012 and a bit outdated, but it highlights the difference between Australia and the United States:
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt
Look under "Public debt as a % of GDP" and "Net government debt as a % of GDP" for both Australia and United States. Also, Australia holds an AAA soverign credit rating compared to the US.
The above is just pure facts and data that is relevant to your decision as an Australian (if you are one) to invest in gold. Nothing more, nothing less. If you want to buy gold, nothing's stopping you, ultimately it is your money after all.
