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About That Supposed Correlation of the U.S. Dollar and Gold….

The supposed correlation of the U.S. dollar and gold is not visible in the 5-year charts.

by Charles H. Smith, Of Two Minds:

One of the most widely accepted truisms in what passes for our financial media is that the dollar and gold are correlated: when the dollar weakens, gold rises, and when gold rises, the dollar declines.

Nice, except this vaunted correlation isn’t remotely visible in the charts. Let’s have a look. Here is the 5-year chart of the DXY Dollar Index, the most widely quoted measure of the U.S. Dollar:

I’ve marked the charts up seeking the sort of correlation that is accepted with near-religious faith and come up with near-random fluctuations. Let’s start with the basics of correlation:

Read More @ OfTwoMinds.com

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