Betwixt & between
INVESTORS AND SPECULATORS buy gold when they lose confidence in money, or if too much money is printed. About two years ago, the United States began printing money at a phenomenal rate and then the gold price rose to more than US$1 000/oz. But since year-end 2009, the US presses are running much slower and the gold price is starting to settle down at just more than $1 000/oz. Now Europe is starting to print. The first trillion euro, mainly to help Greece to continue its sinful life, are currently being printed – and again the gold price is starting to rise, this time to new record levels of more than $1 200/oz.
But that’s not really the right yardstick. Look at the gold price in euro, because that’s the currency being printed too excessively. The graph tells its own tale – and it’s difficult to win an argument that gold no longer has anything to do with money.
Analysts say copper is a much better measure of the economy than others who claim that title. If the price of copper rises it shows things are going well in the world economy. Of course, the opposite is also true. If the price of copper falls sharply – such as the 6% in one day last week – it’s a warning that the prospects for the economy are falling.
By putting gold and copper on the same graph you can see two bedtime stories at the same time. Look at the graph. Somewhere around March the gold price warned: you’re printing too much money, especially euro. The price of copper warned that prospects were fading for world economic growth. This is a good graph and a useful item for the agenda at the monthly board meeting to shorten the endless discussions about the economy.