Dr Brian Lucey and Dr Fergal O’Connor have just published some interesting research on the correlations of the gold price and gold mining indices.
In ‘Are Gold Bugs Coherent?’, the academics use wavelet models to surface the relationship between gold miners stock prices and the price of gold. Specifically, they examine the relationship between the gold price and the NYSE ARCA Gold Bugs index of gold miner share prices over a 17 year period using wavelet analysis.
They find that
“that there is little relationship in the short run but some significant and long standing long run relationships and that gold prices appear to lead gold miner stock prices.”
There is now a large body of academic research which shows that gold is a safe haven asset and a hedging instrument and can play a “useful role in reducing a portfolio’s risk.”
This has again been seen in recent weeks with gold having risen by more than 4% year to date, while leading stock indices such as the S&P 500 are down by more than 7%.
The research entitled ‘Are Gold Bugs Coherent?’ can be accessed here
LBMA Gold Prices
25 Jan: USD 1,103.70, EUR 1,020.29 and GBP 773.96 per ounce
22 Jan: USD 1,097.65, EUR 1,012.55 and GBP 769.63 per ounce
21 Jan: USD 1,096.80, EUR 1,006.98 and GBP 774.99 per ounce
20 Jan: USD 1,093.20, EUR 999.73 and GBP 771.08 per ounce
19 Jan: USD 1,087.00, EUR 999.77 and GBP 759.79 per ounce
News
Gold Logs Weekly Gain; US Mint Bullion Sales Strong – Coin News
European Stocks Halt Rebound as Energy, Commodity Producers Fall – Bloomberg
Gold Is Back in Fashion After a $15 Trillion Global Selloff – Bloomberg
Asia stocks edge up after Wall Street gains on crude surge – Reuters
LME Said in Talks With Banks to List London Gold Contracts – Bloomberg
Commentary
Davos Depression: Soros Predicts Devastating Deflation, Repeat of 2008 – Max Keiser
Desperate in Davos: policymakers struggle for answers – Reuters
China’s banking stress looms like Banquo’s Ghost in Davos – Telegraph
CEOs gloomy about 2016 as world drowns in $200 trillion in debt – Sydney Morning Herald
“Owning gold” would have saved a lot of “financial destruction” – Gold Seek
Breaking Gold and Silver News Today – Click here
