Copper-Gold Ratio


I look at gold vs. general (positively correlated) industrial metals quite a bit, but in listening to the Bob Hoye interview here, I got the prompt to check out copper-gold (CGR).

No big lecture here, just a chart of CGR and the S&P 500 showing the close correlation between the assets of hope, growth and inflation, post Y2K, dot.com bubble and leading into phase one of the credit bubble.

If you are an investor in gold, you are not ‘pro-inflation’ as so many cheer leaders, commodity gurus and gold bugs seem to be. You instead favor economic contraction as it will signal what a normal system tries to do in order to purge itself of policy toxins. Well, I guess a lecture slipped in there after all.

What we have going on currently appears to be a sort of echo mania as the system promotes the delusion that more money printing, more credit and ever more POLICY can arrest the forces that compel economic contraction. Anyone looking for investment merit in gold and especially its miners and explorers is not cheering runaway inflation as manifested in after-effects like runaway prices in stuff like copper and oil.

http://biiwii.blogspot.com/2010/04/copper-gold-ratio.html