In theory and without considering commissions, what this chart shows in plain English is that if you invested $100 at the London a.m. gold fix on January 2, 1970, sold your position at the London p.m. gold fix the same day, then reinvested the proceeds the next day at the London a.m. fix and sold at the p.m. fix once again – and did that every business day for 45 years in a row – you’d have had the magnificent sum of $12.13 in your trading account at the close of business on February 27, 2015.
This is what I call the ‘London bias’ – and for most of the last 45 years, it’s been negative regardless of the gold price trend indicated by the Y axis.
In other words, since January 2, 1975 – and with the very odd exception in the interim – the gold price has closed for a loss between the London a.m. and p.m. gold fixes for 40 years in a row regardless of what was happening in the overall gold market.
Also note on this chart that during the biggest gold bull market in history between 1999 and 2011, the ‘London bias’ continued to be negative, as the gold price closed down every year between the fixes.
How is that possible in a free market, you might ask. Well, the answer is that it ain’t.
This post was published at Casey Research
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