Wednesday, May 21, 2003 4:34:14 PM
XAU/copper ratio vs The Long Bond
Author: mdorsey
Date: May 21, 2003 12:57 PM
Subject: Time for another look.
. http://www.suite101.com/discussion.cfm/investing/12763/1502-1511#message_10
""If you had simply used the XAU/copper ratio and ignored everything else, you could have exited the bond market virtually at 'the peak' in 1989, 1996, and 1998 and caught everything but the last price run up in 1993. Since it has worked so nicely, we wanted to show where things stand at present.
The 'key' level for the ratio is 1.19:1. We have marked with vertical lines where the bond market was when the ratio pushed up through this point and also note that through much of 1997 and 1998 the ratio approached this level but...failed just below it. The bond price peak occurred at the exact point where the ratio finally managed to move marginally through 1.19:1.
What does this mean?
It suggests that bond are a reasonable long-term hold UNTIL the XAU moves almost 20% higher than the price of copper. With copper currently trading around 65 to 66 cents, this argues that bond prices would peak if the XAU were to drive up through 77 (compared to 55.50 at last Monday's close).""
http://www.gold-eagle.com/editorials_01/...
Current XAU is 75.67. Copper is 77.15. So ratio is less than 1.00. Bonds are good to go for a while longer IMO.
=====================================================
My question is what level tells you to buy?
Author: mdorsey
Date: May 21, 2003 12:57 PM
Subject: Time for another look.
. http://www.suite101.com/discussion.cfm/investing/12763/1502-1511#message_10
""If you had simply used the XAU/copper ratio and ignored everything else, you could have exited the bond market virtually at 'the peak' in 1989, 1996, and 1998 and caught everything but the last price run up in 1993. Since it has worked so nicely, we wanted to show where things stand at present.
The 'key' level for the ratio is 1.19:1. We have marked with vertical lines where the bond market was when the ratio pushed up through this point and also note that through much of 1997 and 1998 the ratio approached this level but...failed just below it. The bond price peak occurred at the exact point where the ratio finally managed to move marginally through 1.19:1.
What does this mean?
It suggests that bond are a reasonable long-term hold UNTIL the XAU moves almost 20% higher than the price of copper. With copper currently trading around 65 to 66 cents, this argues that bond prices would peak if the XAU were to drive up through 77 (compared to 55.50 at last Monday's close).""
http://www.gold-eagle.com/editorials_01/...
Current XAU is 75.67. Copper is 77.15. So ratio is less than 1.00. Bonds are good to go for a while longer IMO.
=====================================================
My question is what level tells you to buy?
Kirk out
#board-1574
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