I think this is brilliant sleuthing by our member Red Label

His original thesis is posted on the sidebar https://goldtadise.com/?p=417060

I am re posting his comments to a query by Northstar in a post below that many have likely missed.

here is my interpretation first:

I believe Red is saying he has discovered that the ratio 120,000 divided by the DXY is a constant ( plus or minus 3%) where the price of gold is adjusted to by the PTB….within the framework of the Bretton Woods Monetary System)

Basically Red is saying that Gold is tied to the DXY ( dollar index) and will not be in a Bull until it is rising regardless of the Dollars movements.

Until this ratio is broken , as it was going into the 2011 top…the price of gold is going nowhere and is NOT in a Bull market

Do I have this right Red ?

If the Gold price is wandering from this 120,000 / DXY it will be adjusted up or down frequently to get back in line.


That’s the theory Fully. IMO physical buying or selling from other sources other than the CB’s drives deviations in Gold price. IMO The CB’s want and need a steady price in Gold.

If the $USD is = 100 has shown that Gold price = $1200 +/-. there has been a correlation in play since last November regardless of the $USD Index Gold has remained in this ratio +/- 3%. The deviation from the ratio being overbought oversold conditions in the market. The OB/OS conditions were in the range of $20-$50. The interesting thing OS conditions were not necessarily followed by OB conditions and vice versa.


Chart in TradingView “120000/DXY”

Likewise today 1200/(89.70/100)=1337 Gold is showing to be $7 below the ratio at the moment. Gold has tracked this ratio for the last 15 months step for step. If the ratio holds 80 $USD will yield $1500 +/- Gold (likewise if the 110 $USD will yield $1090 +/-). So if you anticipate in your post a $100 dollar drop in Gold (ie $1200) it would likely mean an increase in the $USD near 100 unless the ratio breaks.

IMO the correlation needs to break for there to be a bullish /bearish market in Gold otherwise it is simply currency movement (purchasing power of the $US).