Benford's Law Applied To Gold
Gold is another asset that I follow and am not surprised to see it adhere to the principle of midpoints as explained by Benford's Law, also known as the Law of Anomalous Numbers. These gridlines I've drawn are midpoints and viewed on a logarithmic chart in order to more easily compare rates of change across magnitudes of price over a long period time. I have explained the rationale in previous posts, which you can view in the links below.
The probability of leading digits according to Benford's Law:
P(1) = 30.1%
P(2) = 17.6%
P(3) = 12.5%
P(4) = 9.7%
P(5) = 7.9%
P(6) = 6.7%
P(7) = 5.8%
P(8) = 5.1%
P(9) = 4.6%
Legend:
1.33 light blue
1.78 purple
2.37 pink
3.16 red
4.21 orange
5.62 dark green
7.50 light green
10 dark blue
Next order of midpoints in gray
The probability of leading digits according to Benford's Law:
P(1) = 30.1%
P(2) = 17.6%
P(3) = 12.5%
P(4) = 9.7%
P(5) = 7.9%
P(6) = 6.7%
P(7) = 5.8%
P(8) = 5.1%
P(9) = 4.6%
Legend:
1.33 light blue
1.78 purple
2.37 pink
3.16 red
4.21 orange
5.62 dark green
7.50 light green
10 dark blue
Next order of midpoints in gray
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