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Here’s something I have wanted to do for a while.....

 

I have used online datasets to calculate UK houseprices in gold and added an RSI and MACD calculator. So G0ldfinger’s style of charts are now augmented by some technical indicators.

 

This is the first time I have done this analysis, so while it looks good by eyeball, I need to verify the values when I get a chance. In the meantime, any thoughts on the provisional results?

 

My observations so far :

 

+Since 1971, UK houses valued in gold look overbought when the RSI is at 70 or above. We are now still at RSI = 70 despite a huge drop from c. 700 ounces to c. 200 ounces since 2004. More drops ahead?

 

+MACD histogram still positive in Feb 2010, but perhaps heading back to below zero. Again may suggest further drops looking at historical patterns of this indicator on this chart in months ahead.

 

2h4b781.jpg

 

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+MACD histogram still positive in Feb 2010, but perhaps heading back to below zero. Again may suggest further drops looking at historical patterns of this indicator on this chart in months ahead.

 

2h4b781.jpg

Good stuff.

 

Brit houses priced in gold look to be in a corrective phase at the moment [of course, the whole chart is a correction]. I wonder how long it can defy gravity.

 

Out of interest, is that 12, 26 and 9 weeks instead of days used to calculate MACD and signal line?

 

Edited.

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Oh well, seems it is still just a rumour...

 

http://www.reuters.com/article/idUSTRE61P0QZ20100226

"China buying IMF gold" story unfounded: author

BEIJING

Thu Feb 25, 2010 11:24pm EST

 

BEIJING (Reuters) - The author of an article that said China had confirmed it would buy 191.3 tons of gold from the International Monetary Fund said on Friday she didn't have official sources for her story.

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Good stuff.

 

Brit houses priced in gold look to be in a corrective phase at the moment [of course, the whole chart is a correction]. I wonder how long it can defy gravity.

 

Out of interest, is that 12, 26 and 9 weeks instead of days used to calculate MACD and signal line?

 

Edited.

Hi RH

 

It's a monthly chart, so the 12,26 and 9 are months.

 

From my textbook reading, MACD (12,26,9) refer to sampling periods and since the Nationwide is a monthly index, I cannot really do more than a monthly sampling for the ratio of house prices-to-gold (I could interpolate but I feel that would badly affect the maths behind the MACD/RSI calculations.)

 

This is the first time I've recreated technical indicators in excel - the results look right - but am happy to hear any feedback if someone spots an error.

 

 

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Hi RH

 

It's a monthly chart, so the 12,26 and 9 are months.

 

From my textbook reading, MACD (12,26,9) refer to sampling periods and since the Nationwide is a monthly index, I cannot really do more than a monthly sampling for the ratio of house prices-to-gold (I could interpolate but I feel that would badly affect the maths behind the MACD/RSI calculations.)

 

This is the first time I've recreated technical indicators in excel - the results look right - but am happy to hear any feedback if someone spots an error.

Got it. I think the work you've done with the momentum indicators is brill.

 

It's interesting because a lot of this decline has to be as much about a declining pound as it is a story about declining house prices. A similiar chart with the dollar would be perhaps more just a story about declining house prices. As opposed to just being liquid today, the currency you are in is of prime importance.

 

US deflation; dollar stays strong and house prices crash.

 

UK "hyper"-deflation; pound weakens and accordingly house prices [as priced in the local currncy] only themselves weaken instead of crashing [the value of house prices are deceptive - when priced in a local depreciating currency - but from a "third party" currency such as gold or the dollar, prices have crashed... which is what the house/ gold ratio is showing.... here real value is eroding from assets even though nominal prices seem relatively stable]

 

Edit.

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He's now frantically piling into USD. This is the clearest message I've had yet to lighten up on dollars.

 

What a complete and utter fool that man is - jumping from one declining currency to another - and even then managing to get it wrong. I remember him years ago on HPC telling all and any that gold was overbought at 600 USD - I pity anyone who listened to his advice.

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He's now frantically piling into USD. This is the clearest message I've had yet to lighten up on dollars.

 

Oh dear - we've just got a negative MACD crossover on the USD as well. Gold also very close to breaking it's neckline of the very bullish 'inverse head and shoulders' pattern - the dollar is only going one way and it's down.

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Oh dear - we've just got a negative MACD crossover on the USD as well. Gold also very close to breaking it's neckline of the very bullish 'inverse head and shoulders' pattern - the dollar is only going one way and it's down.

But this isn't much to write home about. ... just looks to be a consolidation :) :

 

 

dollarshort.png

 

 

 

 

The weekly chart looks VERY bullish:

 

dollarnewweekly.png

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What a complete and utter fool that man is - jumping from one declining currency to another - and even then managing to get it wrong. I remember him years ago on HPC telling all and any that gold was overbought at 600 USD - I pity anyone who listened to his advice.

 

Because he sounds so smart, his dopey advice sounds smart too. Im just a fool and sound like one too but my advice and decisions have proved very profitable thanks too those who said gold was the place to be in this crisis.

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But this isn't much to write home about. ... just looks to be a consolidation :) :

 

 

dollarshort.png

 

 

 

 

The weekly chart looks VERY bullish:

 

dollarnewweekly.png

 

Sorry - disagree with both of your observations:

 

1) On the daily I see strong negative MACD divergergence starting from Dec 21st

 

2) On the weekly - the price has run into significant resistance at the 200MA - there also looks like quite a tough resistance line at 82-83 to overcome

 

I would say (from the chart alone) that the resistance looks tougher than the support at the mo.

 

Cheers

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My observations so far :

+Since 1971, UK houses valued in gold look overbought when the RSI is at 70 or above. We are now still at RSI = 70 despite a huge drop from c. 700 ounces to c. 200 ounces since 2004. More drops ahead?

 

+MACD histogram still positive in Feb 2010, but perhaps heading back to below zero. Again may suggest further drops looking at historical patterns of this indicator on this chart in months ahead.

 

2h4b781.jpg

Something doesnt look right about that RSI indicator.

How can it still be "overbought"?

 

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He's now frantically piling into USD. This is the clearest message I've had yet to lighten up on dollars.

 

I have hedged about 2/3rds of my Dollar exposure recently,

by purchasing in-the-money Puts on UUP (a Dollar etf).

 

If I sell 1/3, I will be fully hedged, and if I sell more, then the UUP puts will hedge the Dollar exposure

imbedded in my Put positions

 

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Sorry - disagree with both of your observations:

 

1) On the daily I see strong negative MACD divergergence starting from Dec 21st

 

2) On the weekly - the price has run into significant resistance at the 200MA - there also looks like quite a tough resistance line at 82-83 to overcome

 

I would say (from the chart alone) that the resistance looks tougher than the support at the mo.

 

Cheers

Perhaps... but my "very bullish" comment was referring to the MACD on the weekly chart. On the face of it, the momentum is with the dollar at the moment.

 

Putting it in context, even if the dollar went to 88 over the next six months or so, I doubt gold [in dollars] would go far below 1000 [am sticking to a post QE floor of 900]. If something like this does eventuate, I'll be piling most of my dollar reserve into gold.

 

 

dollarnewweekly.png

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previous.gif

 

Looking at the previous pattern on a relative chart [2008], even if the gold price in US dollars declined in the next few months, it could easily increase at the same time...when priced in pounds.

 

This chart is saying diversify out of Sterling.... whether into the dollar, gold, or both.

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