Replies to post #242795 on Zeev's Turnips Patch-No Politics (ZEEV)

[onesevenus]

Hi Dan,

Yeah, but that's only against the Euro
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I pretty much follow what UBS guys have to say on that topic. It simplifies my view of the world:

Taken from UBS post:

Regular readers of UBS gold research will note that we base our forecasts on a
model derived from two variables. The most important factor that drives the
dollar denominated gold price is the strength or weakness of the US dollar;
the other factor is the level of speculative and investment money positioned
in gold. We use the USD/EUR exchange rate as a barometer of the strength of
the US dollar with a strong euro equivalent to a weak USD. Whilst it is
impossible to estimate the size of investment and speculative positions in
gold, the commitment of traders report of Comex gold futures and options
position appears to give us a good proxy for overall investment in gold. Work
undertaken in conjunction with Simon Kendall, UBS gold equity analyst in
Johannesburg, South Africa demonstrates that there is a better than 95%
correlation coefficient between XAUUSD, EURUSD and the Comex net long
position. The formula from this work, together with our USD/EUR forecasts and
our predications of speculative long positions in gold are the basis of our
determination of our forecasts for the dollar-denominated gold price.