Chart of the Day - Thursday, January 9th, 2020

Today's Chart of the Day was shared by Jeroen Blokland @jsblokland. The chart compares the performance of Gold and the Japanese Yen ($JPY/USD) over the past six years. Due to the safe-haven characteristics of these assets, there exists a solid historical relationship between them. By overlaying the two price charts, Blokland is highlighting not just the long-term positive correlation, but more importantly, the near-term divergence between them. Beginning in early November, you can see a noticeable dislocation between their relationship as the Yen is pressing on fresh seven month lows while Gold recently achieved its highest level in almost seven years. As with any correlated assets, prices can diverge for a while, but due to the time-tested nature of this one, it would be wise to pay attention to this and anticipate that one asset will eventually catch up or down to its counterpart.