Intermarket Analysis

I wanted to take the time to comment on the relationship between gold and bonds. I know many people like that relationship. It is a good one, but I think silver and bonds is a much more reliable relationship. I have tested both and have used the relationship between silver and bonds since 1997. I think the reason that this is true is that since gold is still viewed in a link to the dollar, central banks have manipulated the price of gold over years,selling reserves to stop rallies. This is not true of silver and why it works better.

I also think that one of the reasons gold is doing so well is that the central banks have lost control of the market and the fact that they artificially kept prices low for some many years is resulting in prices just reaching a equilibrium now in the 450-550 area.
 
Mr. Ruggiero:
I enjoyed your analysis on the silver/bond relationship, and was convinced by it though, though I'd like to see some of your data. BUT, it makes sense, what you say with Central Bank intervention! Relatedly, by logical extension, then, I wonder what your thoughts on the Swiss Franc/gold relationship, which appears on the list I posted on compelling relationships? What does it indicate precisely about the currency, hysteria-speculation in general, and is it any kind of counter indicator for gold? As usual thanks in advance for your erudite and hopefully comprehensive responses.
 
In my limited experience and biased view, intermarket analysis sounds better than it works. Personally, I have not been able to use it in a meaningful way, either to generate more reliable setups or to reduce the size of my protective stops. I saw no incremental benefit by adding this variable. I won't pretend that my research and testing some years ago was exhaustive and conclusive, but I did not see anything sufficiently worthwhile to motivate me to investigate further.
 
I have been using it for over 12 years, Many of the systems I have developed still work using the same parameters from 5 to 10 years ago. The intermarket divergence model of price-average price works well. Let's try to work though an example together. What have you been trying to do ?
 
Presently, I only trade ES on an intraday basis using 1-minute charts. A few years ago, I tried to improve the reliability of my setups by also looking at bonds and 10-year notes in the context of my method. I looked at NQ as well. As I mentioned, my study was hardly exhaustive (either in scope or depth). I did not even tabulate my results. But I felt that I had sufficiently scrutinized the charts to "comfortably" conclude that I would not be pursuing the matter further for the time being. I did not look at the dollar or any physical commodities at the time, which may or may not have added some value. I suspect that you are not impressed by my lack of rigor, and I cannot blame you. Even so, I am quite comfortable with the method I presently use which does not incorporate intermarket analysis.

P.S. My initial interest in intermarket analysis was spurred by John Murphy's book on the subject, which I had read in the mid-90s.
 
I think illiquid's point on 01-05-06 04:55 PM should be addressed. He/she makes A COMPELLING POINT. What do you think about his/her point of intermarket analysis working until it no longer works? Specifically, have there been specific markets that do not get disconnected/delinked or however you may technically describe it? Why bother, why look for relationships and use them, if all these markets get delinked?
 
Murray,

This thread is starting to show signs of life; I hope you haven't forgotten about us. I wrote the following a week ago in response to your comments on the influence of the Central Banks on GOLD. I thought it was good jumping point to another topic...although I'm not sure where I saw it...Murphy's book? or another trader? I've wondered about it for 4 years now! Please respond when you get a chance.

"t makes sense, what you say with Central Bank intervention! Relatedly, by logical extension, then, I wonder what your thoughts on the SWISS FRANC/GOLD relationship, which appears on the list I posted on compelling relationships? What does it indicate precisely about the currency, hysteria-speculation in general, and is it any kind of counter indicator for gold?"
 
Quote from swingman:

Mr. Ruggiero:
I enjoyed your analysis on the silver/bond relationship, and was convinced by it though, though I'd like to see some of your data. BUT, it makes sense, what you say with Central Bank intervention! repeatedly, by logical extension, then, I wonder what your thoughts on the Swiss Franc/gold relationship, which appears on the list I posted on compelling relationships? What does it indicate precisely about the currency, hysteria-speculation in general, and is it any kind of counter indicator for gold? As usual thanks in advance for your erudite and hopefully comprehensive responses.
More...

I hope you looked at the data I posted on silver/bonds. I have not looked at Swiss Franc and gold, in many years. I will take a look at it and post soon. Sorry about the lapse, I posted partial answers and then got side tracked. If it happens again , private PM me or make a post to remind me.
 
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