Dabchick's Gold Index

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DABCHICK's GOLD INDEX


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Dabchick's Gold Index
This index is intended to show how gold is valued throughout the world independently of the value of any country's individual currency.
It is not really much use as a day-to-day indicator when currencies are stable relative to one another, and is best plotted as a monthly chart.

The 18-year decline seen in the index from its start in 1982 appears to have come to an end in 1999 with the sharp upward movement at the time of the Washington Agreement on Gold (WAG).
Let us hope the WAG marked the beginning of a climb of similar duration.

The Dabchick Gold Index is calculated each day using this formula : A x B / 452 where :

A = Today's Gold price in US Dollars
B = Today's Bank of England Effective Exchange Rate Index ( ERI ) for the US Dollar
452 = a constant which contains the values of A & B in Jan 1982 and also makes allowance for the rebasing of the ERI from 1973 to 1990 conditions in 1995
Calculation of Rebasing Constant ( 452 )
{ ( $ Gold Price Jan 82 ) x ( $ ERI Jan 82 [basis 1973] ) }
divided by
Adjustment factor when BoE rebased the ERI to 1990 in 1995
equals................. { ( $ 386 ) x ( 1.10 ) } / 0.94
equals .................424.6 / 0.94
equals..................452


January 1982 was chosen as the starting point because gold seemed to have settled down quite well by then after the excesses of 1979 - 1981.

The Index was 100.00 on 1st Jan 1982
Regards...........Dabchick

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