Gold to base metals ratio – why is it low?
Posted on 02 September 2010
One further thought following on from our previous post (here) – if the RBA Commodity price index is at record highs, why is it then that industrial metals are trading historically cheap relative to gold?
Perhaps it is a reflection of the uncertainty that prevails across the markets. There has been enough talk about the debasement of paper money to suggest that some are buying gold as an alternate currency. Also, with the ZIRP in place across most of the developed world, the negative carry of holding gold has fallen appreciably. Still the point remains, if fundamental demand for metals is so strong, why is the base metals to gold ratio at levels not seen since the start of the Great Moderation?
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