[This update brought to you from the Department of Pointless, Ill-informed Futorology]
As part of some customer research (there’s no way I personally can afford to invest in gold!) I’ve been looking into the gold market, and cross checking data from Wolfram Alpha against trends from Google Insights. I’m sure this kind of thing is in its infancy, but it’s pretty interesting to see how the price of gold fluctuates kind of in line with the volume of searches on Google for “gold prices”. I’ve overlaid a couple of graphs so you can see what I mean:
There’s some kind of correlation there between people looking at the price of gold and the price of gold itself. Maybe not the strongest link, but there is some kind of relationship between the two.
But, when you chuck a further metric into the mix - Google searches for “buy gold”, you can see a massive difference in the trends. There’s a huge spike in interest in people looking to buy gold in October ’08 when the headlines were full of credict crunch news and the stock markets were in free-fall, but that tailed rapidly off and has more or less flatlined since. Meanwhile, the price of gold has continued to head North…
What might this tell us? Well, if I were thinking about the price of gold, I’d probably make an inference that gold is overpriced. The number of people looking to buy is fairly static, and a long way short of its peak several months ago, but the price shows no sign of coming off an upward trend.
Of course, I’m a complete layman here – I know literally nothing about the gold markets. What I plan to do though is revisit this in a year. My hunch (and I give that massive emphasis!) is that the price of gold should start to fall.
Whether or not I’m right, there’s an interesting point here that traditionally trading is often governed by ‘me too’ short termism, the personal hunches of traders and a kind of Groupthink amongst experts. You don’t have to read Popular Delusions and the Madness of Crowds to have seen that in operation of late: the merest glance at house prices should be indication enough. But what if we’re edging towards a more transparent state of affairs – where online tools can make better correlation possible? In light of the current economic crisis let’s fucking hope so, eh?
You’re right, I think this is a shift in trends since the property and stock market has gone tits up.
Lets see how long it is a good investment for.
Interesting stuff, wonder if other commodities have a correlation with Google search terms…please investigate!