Wednesday, April 3, 2013

Michael Pascoe Refers to Pascometer / Pascoe Indicator

Unfortunately the Pascometer (contrarian Gold price indicator) has remained broken for the last 18 months as several articles from Michael Pascoe on Gold have failed to generate a sustained rally to take the price to new highs. Is it possible that, by discovering this self monitoring tool, Michael Pascoe has actually thrown off its accuracy? He writes today:
There are unkind gold bugs about who believe every time I write something negative about their favourite metal, its price subsequently rallies, so time to throw them a bone: a decade after the launch of the first gold exchange traded fund, the yellow metal is going nowhere, it’s Australian price of $1,507 an ounce is where it was 20 months ago without a dividend or interest payment to soften the under performance.

And it could be worse – anyone buying gold at the peak in August, 2011, is carrying a capital loss of $291 an ounce at the time of writing, never mind the opportunity cost of not being in, say, appreciating and high-yielding bank shares over that period.

Of course the five-and-a-half years before that were very fine indeed for gold, running up from about $600 to $1800 when stock markets were not happy places – an expensive time to be wrong about gold’s appeal, as I was. Yahoo Finance
Well, thanks for the bone, here's hoping that it kicks along the price as it has been a very boring correction then sideways consolidation over the last year and a half. Although not as deep as some other corrections, the tedious nature of the sideways grind has been enough to generate bull market lows in sentiment and oversold levels as discussed recently on the blog.

To Pascoe's credit the last article he penned titled "Sell gold, buy base metals at the End of Fear" has worked out well (at least so far) with Gold priced in AUD falling around 5% since published and base metals (measured by the GFMS Base Metals Index) having traded higher:

Click Chart To Enlarge: GFMS Base Metals 6 Month Chart

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