Gold’s Latest Correlations with 21 Major Assets/Economic Indicators


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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.


NIA has just calculated gold’s latest correlations for the past decade with 21 major assets/economic indicators including other precious metals, commodities, currencies, stocks, bonds, central bank balance sheets, foreign currency reserves, national debt, budget deficits, and money supply. Gold currently has an extremely high correlation with 3 assets/indicators, a high correlation with 6 assets/indicators, a moderate correlation with 3 assets/indicators, a low correlation with 6 assets/indicators, and no correlation with 3 assets/indicators.



Gold’s #1 strongest correlation is with the European Central Bank (ECB)’s total balance sheet assets. Gold has an extremely high 10-year correlation coefficient with ECB assets of 89.74%.

totalecbassetsvsgoldfebruary2016Two months ago with gold at $1,068 per oz, NIA published a report entitled ’ECB Balance Sheet: Gold Overdue for 23% Rally’. NIA’s report showed how based on the average Gold/ECB Asset Ratio during the previous decade – gold had a fair value at the time of $1,311 per oz, which made gold overdue for a huge short-term rally of 22.78%.

Since NIA’s December report, gold has rallied by 16% to $1,239 per oz – while the ECB Balance Sheet has grown further – increasing gold’s fair value to $1,387 per oz. Gold needs to immediately rise by an additional 11.92% – just to catch up to its current fair value.

goldvsfairvalueandpercentagechangeneededtoreachfebruary2016The ECB has already committed to expanding its balance sheet by an additional €60 billion per month through March 2017. Based on the current EUR/USD exchange rate of $1.1286, NIA forecasts the ECB balance sheet to rise over the next 13 months from its current level of $3.174 trillion – up to a new all-time high of $4.054 trillion.

However, with the German-U.S. 2-year bond yield spread tightening in recent weeks as the world begins to realize that the Fed won’t be raising rates for at least the next 24 months – the Euro is beginning to rally big. NIA expects the Euro to continue rising against the U.S. Dollar by about 1% per month – to a level of $1.2844 by March 2017. If NIA is right, ECB balance sheet assets in March 2017 will likely reach $4.614 trillion.


Based on NIA’s extremely conservative scenario, with March 2017 ECB Balance Sheet assets of $4.054 trillion – gold’s fair value will rise over the next 13 months to $1,772 per oz. Based on NIA’s most likely scenario, with March 2017 ECB Balance Sheet assets of $4.614 trillion – gold’s fair value will rise over the next 13 months to $2,016 per oz.


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