The Gold And Silver Bond Fund System by Dennis Meyers, Ph.D.
Building on his previous Gmi system article, this Contributing Editor develops a system using the Philadelphia Stock Exchange daily gold and silver stock index to trade a long-term government bond fund.
Last month, I examined the relationship between Barron's Gold Mining Index (GMI) and the 30-year Treasury bond rates. A system was developed to predict the weekly direction of the 30-year T-bond rate using the GMI. One of the problems encountered in developing that system was that the GMI is only available from Barron's on a weekly basis. While a system using weekly data is certainly valuable for filtering out daily price fluctuation noise, significant changes in prices or events during the week cannot be addressed by the system until the weekend. This
one-week gap in the ability to take action carries with it significant economic risk or the loss of opportunity.
Here, I will build on last month's article and develop a system using the Philadelphia Stock Exchange (PHLX) daily gold and silver stock index (XAU) to trade a long-term government bond fund.