Investors are always interested in the real reason behind moves in stocks and gold. I have previously explained the reason behind gold move in my column titled “Is it time to back up the truck and buy gold and silver?”
Thursday, the Japanese yen is at it again. The yen is leading, gold and stocks are following. The correlation is crystal clear from the annotated tick chart.
Please click here for an annotated tick chart of yen, gold and stocks.
The chart marks the time when Bank Of Japan (BOJ) made its announcement. The yen immediately gapped up. Gold followed to the upside, and stocks followed to the downside.The chart uses the futures and not ETFs because popular ETFs were not trading at the time of BOJ announcement. Investors who do not use futures can look at the longer-term correlation by plotting three ETFs together: SPDR Gold Trust ETF GLD, SPDR S&P 500 ETF Trust SPY, and the CurrencyShares Japanese Yen Trust ETF FXY .
The chart also shows that as Europe woke up, the yen took another leg higher and so did gold.
This is the biggest overnight move in the yen in five years. Japan’s equity index Nikkei 225 fell 3.61%.American investors can look at Japanese equity iShares MSCI Japan ETF EWJ, WisdomTree Japan Hedged Equity Fund DXJ, and iShares Currency Hedged MSCI Japan ETF HEWJ…..Read more at MarketWatch
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