In the same category


IMG Auteur
Published : April 05th, 2007
553 words - Reading time : 1 - 2 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
Our Newsletter...





After my recent article at the Café entitled “Copper – The Juggernaut” I was contacted by

Derek Van Artsdalen who has written a couple of pieces in the Café in 2003 and

2004 related to copper. Our e-mail exchanges led Derek to ask if there was any

pattern in the copper price that would indicate how gold might move. The

analysis that this prompted me to do resulted in a remarkable revelation which I

will share with you.


Figure 1 shows the gold price (red) and copper price (black) from 1987 to 2007.


                                                                   FIGURE 1


From just a visual inspection it would appear that there is a correlation between

the prices of copper and gold. I decided to go a step further by making a

crossplot of the copper and gold prices to investigate how strong this correlation

really is.

Figure 2 shows the crossplot of the data covering the period 1979 to 1987 which

includes the last major bull market in gold. It can be seen that there is a

remarkably strong correlation between gold and copper prices. A best fit line is

shown along with the equation of the line. The r-squared value is 0.75 which

confirms a very strong correlation


                                              COPPER-GOLD Crossplot 1979-1987


                                                                  FIGURE 2


In figure 3 a crossplot is shown of copper and gold prices from 1995 to 2007.

This plot reveals a very strong correlation between gold and copper prices for

this 12 year period with an even higher r-squared coefficient of 0.86.


                                           GOLD-COPPER CROSSPLOT 1995-2007


                                                                     FIGURE 3


What this study reveals is that gold and copper prices move in unison and have

done so for the 20 years of data that have been studied here. But just how good

are these correlations? Of course, we all know that gold and silver move in lock

step with each other and are, therefore, highly correlated. Figure 4 shows a

cross-plot of gold and silver data from 1995 to 2007 which confirms the strong

correlation between gold and silver prices. The r-squared coefficient, however, at

0.83 is comparable to that of the gold-copper correlation indicating that gold and

copper prices correlate with each other just as strongly as gold and silver prices!


                                            GOLD -SILVER Crossplot 1995-2007


                                                              FIGURE 4


Some analysts have suggested that the monetary crises that are looming on the

horizon will necessarily drive the price of gold and silver sky high. But they also

suggest that the negative implications for the global economy of such monetary

turmoil will lead to economic recessions that will crimp the demand for an

industrial metal like copper and its price will fall due to falling demand. What this

study shows is that there is no historical precedent for such theories. When gold

prices move up, copper moves up, and when gold prices fall, copper prices fall.

In recent articles I have concluded that copper is in a strong long term bull

market. It is an unstoppable juggernaut due to rapidly shrinking above ground

inventories. This work bolsters that view and shows that copper is just as strong

a beneficiary of monetary debasement as the traditional precious metals.



Adrian Douglas


Adrian Douglas writes many articles on his observations and analysis on financial markets, gold and silver markets, and some selected company stocks. The articles were all initially published at








<< Previous article
Rate : Average note :0 (0 vote)
>> Next article
Adrian Douglas is proprietor of the Market Force Analysis newsletter ( Market Force Analysis is a unique analysis method which provides reliable indications of market turning points and when is a good time to enter, take some profits or exit a market. Subscribers receive bi-weekly bulletins on the markets to which they subscribe. MFA also runs a Hotlist of Junior Mining Stocks which they consider will yield outstanding returns.
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Is The Price of Silver About To Explode?
20 OctOzSILV
Andy Hoffman no longer works for Miles Franklins Andy Hoffman no longer supports precious metals only Crypto currencies
Stephen Hawking In His Final Publication: ‘There is No God’
18 Octgranttc
Ever learning, and never able to come to the knowledge of the truth. 2 Tim 3:17
Is The Price of Silver About To Explode?
18 OctS W.
MAYBE the price of silver will explode. I am not a fortune teller! It is the same price it was 12 years ago and it exploded then. But it wi...
Stephen Hawking In His Final Publication: ‘There is No God’
18 OctS W.
I have known since I was 8 yrs old that there is no such thing as God. My parents used to send me off to Sunday School. One time I came home and sa...
Death Penalty for Debasing Currency: US Coinage Act of 1792
17 Octramasart
I wonder if this Act was addressed by the creation of the Federal Reserve Act of 1913? If not, I wonder if we can find some Statesmen in...
Death Penalty for Debasing Currency: US Coinage Act of 1792
12 OctACarr
Always thought this was such an interesting fact, one most aren't aware of. Thanks for the write up.
Gold’s Best Day In 2 Years Sees 2.5 Percent Gain As Global Stocks S...
12 OctACarr
Seems to me like it could be a good time to buy gold coins before the price starts to climb in earnest! ;) I just bought this beauty: https://bulli...
Misesian Destructionism
13 OctFalconflight
Like a laser beam connecting all the dots!
Most commented articlesFavoritesMore...
World PM Newsflow