Gold prices are up solidly in early U.S. trading Thursday, but is largely ignoring stable economic activity, as the first quarter’s gross domestic product expanded in line with expectations. Gold is trading at $2320.82, up $22.59. Silver is trading at $29.01, up 24 cents. Ross Norman’s recent article discusses the copper/gold ratio reaching its highest level in decades and its implications for gold. He explains that humans are naturally inclined to spot patterns, but this can lead to cognitive biases like apophenia, where we see meaningful patterns in random data. Despite traditional economic indicators suggesting gold should decline, it has remained high, defying expectations. The copper/gold ratio, typically a macroeconomic indicator, has shown a strong correlation with gold recently. Historically, peaks in this ratio have preceded major economic recessions. Norman suggests that current market dynamics, including significant speculative activity by Chinese traders, might be distorting the ratio’s predictive power. Gold prices may remain elevated but are likely to be volatile, influenced by factors beyond traditional economic models.
“To accurately understand the past gives us (potentially) a perfect view of the future … opening conduits to make us wealthy – at best – or a sure-fire excellent dinner party conversationalist at worst … or perhaps just a bore …”
-Ross Norman
