Correlation Economics Backup

On August 1st, 2019, Powell said he would stop QT. But what really happened? Balance sheet still going down. Meanwhile, cash in the treasury is now at multi year lows.  

Peter talks about buying vs renting a house.

Since Trump got inaugurated in 2017, gold has outperformed the S&P500.

Platinum has usually been more expensive than gold historically. Lately, the arbitrage between the two metals has been exploding since gold moved up in 2019 (see chart below). Investors who want to bet on this arbitrage opportunity might want to get into the platinum market now. Palladium has doubled in price and manufacturers will start substituting palladium with platinum in petrol cars, boosting platinum demand. Additionally, fuel cell cars use platinum and I see this area growing ten years from now.

The amazing Gold Forecaster Index can predict gold prices 6 months in the future.

So copper has been weak due to lower China growth. The copper gold ratio has been going down, and this is correlated with a lower 10 year bond yield. This all started when Trump announced tariffs in 2018.   Now, when copper goes down, the copper production will go down and silver by-product production will decline as well. This translates into a higher silver price, because of less silver supply. The silver/gold ratio is starting to move up now.

Marc De Mesel has provided a very interesting chart on gold. Whenever production goes down, the price goes up.

Looks like the U.S. China trade war is still intensifying. The effect is, higher inflation, lower GDP growth, lower bond yields, lower oil prices, higher gold prices. And it's getting better .

Unexpectedly...

The Non-farm payroll number is a leading indicator for the unemployment rate.

The premium on the PSLV Sprott Silver Trust is a leading indicator on silver price.

China is definitely slowing down as power consumption growth stalls.

Gold has a long way to go up as registered gold (blue line) is just starting to move upwards.