Hello. My name is Simon Derrick, I'm Chief Currency Strategist at BNY Mellon and this is CantosCharts.

Over the course of the last couple of days we've been having a look at three of the key currencies of 2010 - the EUR, GBP and USD and suggesting all of them have got problems of one kind or another.

As a result, we need to think about what investors are going to look at as a credible alternative to all of those currencies over the course of the next year or so.

Given the lack of real alternatives, particularly for the reserve managers of this world, one of the topics that was inevitably going to come back into focus is gold and gold-related currencies and, therefore, as we come into the end of the year, it's a good opportunity to have a look at a long-term gold chart and see what it might be telling us.

Here we have a longer term chart that is worth looking at with gold. This is going back to 1969 and it's based on a logarithmic scale. And one of the things that really stands out incredibly clearly when you look at this chart is in reality there has only ever been three trends in gold and two of them have been connected with the United States and have been connected with their need to finance the economy to print more money.

The first came here between 1968 and the peak in 1980 when the US was desperately trying to fund the Vietnam war and simply needed to print more dollars to be able to do that. One of the classic outcomes of this was of course the break of the gold standard, the move towards the break of Bretton Woods and free floating currencies from 1971 onwards.

That came to a head in January of 1980, ironically actually when Russia invested in Afghanistan, so maybe there is a theme there as well. But certainly this was the point when finally we reached the peak and when more prudent monetary policy started to be applied in the United States

By the start of the naughties we were in a position where inflation was considered to be dead and where the idea of holding onto gold as a credible asset for Central Banks was considered to be done.

But of course things change. The bursting of the dotcom bubble, the attacks of September 2001 changed the needs dramatically of the US economy and the need to print money to try and revive the economy, the need to provide highly accommodative management policy became the key factor. And sure enough, this is exactly when the trend in gold started, of the new trend in gold first started. As is clear from this log scale chart, we are still firmly embedded in exactly the same trend we have been in for nine years now.

For the moment it doesn't look as though that trend is about to change, but there are, it has to be said, one or two warning signs. In particular, I would point to these momentum charts at the bottom.

As a follower of Dow Theory I am always very well aware that volume should confirm trend and also that you're looking for momentum to confirm trend as well. And what we're seeing here is although we're getting higher highs on the price chart, we are starting to get lower highs on our weekly momentum chart.

That's an early warning sign. It certainly doesn't mean that the trend is anywhere near over yet, but just for something for the long-term investor to keep an eye on, that's worth noting. It suggests that maybe we're in the more mature end of this trend.

But if we focus a little more closely and look at some of the markets that are likely to be driven by this continued uptrend in gold, then possibly the market that people will focus on most naturally is Australia. Here I thought it might be useful to have a look at some of our flow charts for the Australian equity market, because again this speaks of the strength of investor demand.

Despite the fact it has been a rough year politically for Australia, despite the fact that there was talk of a super tax on miners, the demand for Australian equities for investors has never gone away and indeed, if we really look at the course of the last four months, we can see that demand for Australian equities has gone through the roof. If we track that against the price of gold, you will see that that has tracked fairly closely to the demand there as well.

So clearly, investors still are driven by that need to find a credible alternative. Australian equities and the AUD and, indeed, I would suggest most currencies that have got a gold backing in one form or another will continue to find support from investors. Albeit I do think that over the longer run we have to start just getting a little cautious about by how much further this can run over the next two or three years.

Finally, if we look at an AUD chart itself it's interesting to note that we see a not dissimilar pattern to what we saw on the gold chart.

Again, we are breaking to new highs. We've broken through to levels that we haven't seen since the early 1980s and consolidating comfortably above those levels as well. But if we look at our momentum chart, lower highs once again forming. Again, just a warning signal that although this could have a further distance to run, maybe we could see another 5 per cent, 10 per cent on this, in the longer term perhaps we just have to be slightly cautious about how much further this can run.

My name is Simon Derrick. This has been CantosCharts.