LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page >> News >> Story  Disclaimer 
Latest Headlines to Launch New Website

Is Gold Price Action Warning Of Imminent Monetary Collapse Part 2?
By: Hubert Moolman

Gold and Silver Are Just Getting Started
By: Frank Holmes, US Funds

Silver Makes High Wave Candle at Target – Here’s What to Expect…
By: Clive Maund

Gold Blows Through Upside Resistance - The Chase Is On
By: Avi Gilburt

U.S. Mint To Reduce Gold & Silver Eagle Production Over The Next 12-18 Months
By: Steve St. Angelo, SRSrocco Report

Gold's sharp rise throws Financial Times into an erroneous sulk
By: Chris Powell, GATA

Precious Metals Update Video: Gold's unusual strength
By: Ira Epstein

Asian Metals Market Update: July-29-2020
By: Chintan Karnani, Insignia Consultants

Gold's rise is a 'mystery' because journalism always fails to pursue it
By: Chris Powell, GATA


GoldSeek Web

Gold Sentiment

 -- Published: Thursday, 27 February 2014 | Print  | Disqus 

By: David Chapman



Charts and commentary by David Chapman

26 Wellington Street East, Suite 900, Toronto, Ontario, M5E 1S2

Phone (416) 604-0533 or (toll free) 1-866-269-7773 , fax (416) 604-0557





With the improvement in gold prices and the gold stocks since the beginning of 2014 there has also been an improvement in sentiment. The above chart illustrates the improvement in the gold sentiment as a ratio chart with the global stock market. It tells an interesting story given that the above chart goes back to 1984.


First some definitions. The global sharemarket index is an index compiled from market indices around the world. The index has 17 components and is arithmetically averaged in order to give them equal weighting. The 17 components are the – Dow Jones Industrials (DJI), Dow Jones Transportations (DJT), Dow Jones Utilities (DJU), NYSE, S&P 500, NASDAQ, Russell 2000, Hong Kong HSI, Japan Nikkei 225, Singapore STI, Australian AORD, TSX Composite 300, Mexico IPC, FTSE 100, Paris CAC, German DAX, and, Swiss SMI. The index is used to show global sentiment towards the world’s stock markets. As can be seen global sentiment towards stocks has been rising and has now exceeded peaks seen in 2000 and 2007.


Similarly the gold sentiment index has been compiled from a number of datasets of precious metals, gold indices, gold stocks and gold mutual funds from four primary gold producing regions including – USA, Australia, Canada and South Africa. Oddly, the world’s largest producer, China, is not included. Precious metals included are – gold, silver and platinum; indices included are – XAU, HUI, GOX, CRB, GSCI, GPX, TGD, Oz Gold, and, SA Gold; stocks included are ABX, AU, GFI, GG (G in Canada), KGC (K in Canada), and NEM; and, mutual funds included (all US funds) – BGEIX, FSAGX, LEXMX, USERX, and, USAGX. As with the stock index the 29 components are arithmetically averaged to give them equal weighting. Global gold sentiment has been falling since peaking in 2011 although it has recently perked up.


What is interesting is when they are shown as a ratio. It is fiat/gold ratio as it is a comparison between stock market sentiment (fiat) and gold sentiment (gold). The recent peak in the ratio was close to the peak seen in 2001 when gold was trading near $250. This was in some ways surprising as the ratio was fairly steady throughout the 1980’s and until 1996 when the ratio rose sharply as the bubble took off.


After falling from 2000 to 2002, the ratio was relatively steady throughout most of the decade and not far off the levels seen from 1984 to 1997. There was a small spike during the financial crash of 2008. The ratio really took off in 2013 when the gold market and the stock markets went in opposite directions. Since peaking at the end of 2013, the ratio has been falling although it does not yet appeared to have broken the uptrend. A breakdown under 50 on the ratio would probably indicate that the market has swung more in favour of gold over stocks. The ratio is certainly worth keeping an eye on.


The second chart is not so much a sentiment index for gold as a measurement of gold’s relative value. The James Turk Fear Index was developed by James Turk back in the 1980’s as a measurement of gold’s relative value. The Fear Index compares the amount of gold held by a country’s central bank times the current gold price with the money supply of the country. The chart presented below is the Fear Index for the US Dollar.


The US gold reserves are are held by the Federal Reserve in Fort Knox (or least that is what is advised as being held). The Federal Reserve no longer reports M3 but the numbers are available through Shadow Stats  M3 is composed of M1 – notes and coins in circulation, and demand deposits of banks; plus M2 – M1 plus savings accounts and time deposits less than $100,000, money market deposit accounts; plus large time deposits over $100,000,institutional money market funds, short term repurchase agreements and other large liquid assets.


When the Fear Index is rising, there is concern about the safety and stability of the country’s monetary and banking system. When there is confidence, the Fear Index falls. The Fear Index has been in an uptrend since 2001. Interestingly the current correction in gold has taken the Fear Index back to the rising trendline. If the Fear Index were to break back under the rising trendline then it might be signaling the end of the gold bull. However, if the Fear Index rises off the trendline then the index could rise to new highs as was seen in 1977 following a somewhat similar sharp correction in the index.


The Fear Index is an interesting measurement of gold’s value and its trend. It is different from the sentiment indicators but it is one worth keeping an eye on for clues as the future price of gold.





Copyright 2014 All rights reserved  David Chapman


General disclosures

The information and opinions contained in this report were prepared by MGI Securities. MGI Securities is owned by Jovian Capital Corporation (‘Jovian’) and its employees. Jovian is a TSX Exchange listed company and as such, MGI Securities is an affiliate of Jovian. The opinions, estimates and projections contained in this report are those of MGI Securities as of the date of this report and are subject to change without notice. MGI Securities endeavours to ensure that the contents have been compiled or derived from sources that we believe to be reliable and contain information and opinions that are accurate and complete. However, MGI Securities makes no representations or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to MGI Securities that is not reflected in this report. This report is not to be construed as an offer or solicitation to buy or sell any security. The reader should not rely solely on this report in evaluating whether or not to buy or sell securities of the subject company.



“Technical Strategist” means any partner, director, officer, employee or agent of MGI Securities who is held out to the public as a strategist or whose responsibilities to MGI Securities include the preparation of any written technical market report for distribution to clients or prospective clients of MGI Securities which does not include a recommendation with respect to a security.


 “Technical Market Report” means any written or electronic communication that MGI Securities has distributed or will distribute to its clients or the general public, which contains a strategist’s comments concerning current market technical indicators.


Conflicts of Interest

The technical strategist and or associates who prepared this report are compensated based upon (among other factors) the overall profitability of MGI Securities, which may include the profitability of investment banking and related services. In the normal course of its business, MGI Securities may provide financial advisory services for issuers. MGI Securities will include any further issuer related disclosures as needed.


Technical Strategists Certification

Each MGI Securities technical strategist whose name appears on the front page of this technical market report hereby certifies that (i) the opinions expressed in the technical market report accurately reflect the technical strategist’s personal views about the marketplace and are the subject of this report and all strategies mentioned in this report that are covered by such technical strategist and (ii) no part of the technical strategist’s compensation was, is, or will be directly or indirectly, related to the specific views expressed by such technical strategies in this report.


Technical Strategists Trading

MGI Securities permits technical strategists to own and trade in the securities and or the derivatives of the sectors discussed herein.


Dissemination of Reports

MGI Securities uses its best efforts to disseminate its technical market reports to all clients who are entitled to receive the firm’s technical market reports, contemporaneously on a timely and effective basis in electronic form, via fax or mail. Selected technical market reports may also be posted on the MGI Securities website and


For Canadian Residents: This report has been approved by MGI Securities which accepts responsibility for this report and its dissemination in Canada. Canadian clients wishing to effect transactions should do so through a qualified salesperson of MGI Securities in their particular jurisdiction where their IA is licensed.


For US Residents: This report is not intended for distribution in the United States. 


Intellectual Property Notice

The materials contained herein are protected by copyright, trademark and other forms of proprietary rights and are owned or controlled by MGI Securities or the party credited as the provider of the information.



MGI SECURIITES is a member of the Canadian Investor Protection Fund (‘CIPF’) and the Investment Industry Regulatory Organization of Canada (‘IIROC’).



All rights reserved. All material presented in this document may not be reproduced in whole or in part, or further published or distributed or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express written consent of MGI Securities Inc.

| Digg This Article
 -- Published: Thursday, 27 February 2014 | E-Mail  | Print  | Source:

comments powered by Disqus


Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to >> Story

E-mail Page  | Print  | Disclaimer 

© 1995 - 2019 Supports

©, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


The views contained here may not represent the views of, Gold Seek LLC, its affiliates or advertisers., Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of, Gold Seek LLC, is strictly prohibited. In no event shall, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.