The One Chart That Should Worry The Gold Bulls Most

We’ve posted a lot about the ratio between gold and equities, and noted how equities after getting pummelled in gold for a long time, but in our opinion this is even more telling.

It’s the ratio between two metals: Gold and copper. The former is purely a form of savings (well, it has some industrial and jewelry use, but that’s not where the value comes from). The latter is purely an ingredient in industrial, real activity.

Since the beginning of December there’s been a clear shift from gold to copper, as investors feel less of a need to save, and a greater desire to bet on something real. It’s even happening again today. While gold continues to slump (post ADP and ISM), the industrial commodities like oil and copper have sharply perked back up.

Not all hard assets are the same, and in a growing economy with lower perceived risk, investors want to hold the copper-coloured metal, not the yellow one.


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