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GOLD as related to the CRB

Technical observations of

Bob Hoye
Institutional Advisors
May 12, 2006

From 1988 through the summer of 2005 the gold price underperformed most commodities. During that period the ratio of the gold price over the CRB Index found support at 1.25 (the same level seen in 1982, '84 and '85).

Since August the ratio has advanced significantly and now sits at 1.94. This was also concurrent with the move in gold against all currencies (not just against the US Dollar). We can anticipate resistance once the ratio gets to 2.10. It would take a gold price of $742 if the CRB were to remain unchanged. Because this ratio is a dynamic item with two variables we will monitor it over the coming months and advise if it becomes excessive.

(Click on image to enlarge)

The CRB index is not the one used in Pivotal Events. The commodity side of our gold/commodities index has a larger weighting in base metals and no weighting in gold.

-Bob Hoye
Institutional Advisors


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