Gold > $1000

Gold reaches $1000 per ounce for the second time in 2 years.


Unfortunately, gold is a weak indicator of inflation. A historical analysis by Erik Dellith shows that the correlation between gold and inflation is only around 0.15. The table below proves that this correlation changes with time:

Correlation Results
of Monthly Changes		Dates & Correlations
Period 1:8/76 - 6/82
Headline CPI [SA]0.17
Headline CPI [NSA]0.18
Period 2:6/82 - 4/01
Headline CPI [SA]0.07
Headline CPI [NSA]0.03
Period 3:4/01 - 9/06
Headline CPI [SA]0.23
Headline CPI [NSA]0.16

SA: Seasonally Adjusted
NSA: Not Seasonally Adjusted

The author concludes that
The data suggest that the yellow metal reflects inflation -- although not very strongly -- mostly when prices are rising at a rapid pace. The relationship weakens significantly during times of moderate inflation.

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