Archive for July, 2011|Monthly archive page

Gibson’s Paradox + Greenspan’s Conundrum = Overstreet’s Enigma

After all of my fooling around with variations of the gold/copper ratio in my most recent posts, who would have guessed I could have missed such an important variation as this:  gold/dollar=copper/10-year yields?

Over the course of the last decade, it is not hard to imagine that with commodities breaking records to the upside and the dollar and yields hitting record lows that the gold/dollar ratio will look a lot like the copper/yield ratio or an industrial metals/yield ratio. Continue reading

Modeling copper and searching for oil/gold

I have been disappointed about how far away I am from figuring out the oil/gold ratio, never mind why it has the ‘effects’ or implications that it does. Today, though, after finally pinning down the gold/copper ratio, I thought I could smell oil/gold, and I sense that it is right under my nose, but try as I can, I cannot model that ratio yet.

Before I tangle with oil/gold, though, I just wanted to nail down gold/copper, since yesterday’s post was rather confusing. Continue reading

Head/heels for gold/copper

I don’t know if I’ve been this excited about market analysis since the oil/gold ratio first thwacked me square in the middle of my forehead a few years ago. Every time I seem to more or less pin down one ratio, another ratio that I thought I had more or less secured on a previous occasion begins to feel less certain. This morning, having decided to look back at some of my previous posts to see if they still made sense or were too obviously the product of writing far into the night when I should be fast asleep, I stumbled back onto the conclusion I had made about the gold/copper ratio. This ratio had been causing me trouble recently, because it seemed to be a counterpart to the silver/oil ratio which seemed to be a mirror or indicator of the short term bond yield. Continue reading

Microcycles and Macrocycles

It seems odd that the oil/copper ratio should correlate or appear to correlate with the yield curve so strongly. It is not so much the fact that oil and copper would be correlated with yields in some fashion, but that the correlation doesn’t run the other way around. I would have guessed that the ‘Leeb oil shocks’ that followed on Klombies’s copper/oil extreme and brought about the collapses in the NASDAQ bubble of the late 1990s and the financial crisis of 2008 would have also been behind the negative yield curves that warned of looming recession.

But that just doesn’t seem to be the case. Continue reading

Commodity ratios and yields

I’m going to try to recap yet again where speculation has brought us before engaging in yet another round. We have suggested that the oil/copper ratio has a close or perhaps leading relationship with the dollar/yield ratio and the yield curve. Finding historical charts of copper/oil and copper/silver is pretty difficult, so I’ve had to make do.

And so will you! Continue reading

Oil and the Commodity Complex

Thinking about some of the problems I’ve been trying to tackle in these recent posts over the weekend, I tried to formulate a more coherent way of structuring the issues, and at first I thought I had stumbled on something new, but after having looked at the little data I can get my hands on, it appears somewhat less promising than I first thought. Nevertheless, I have decided to make use of it as a way of keeping all the moving pieces together. Continue reading

Predicting Copper & the Importance of the Gold/Copper Ratio

I want to continue with the copper theme here, but let’s briefly recap where we have been over the last few days. We originally suggested a way of forecasting oil movements and prices, with Kevin Klombies’s copper/oil ratio playing the primary role. Based on this and techniques I have developed, we came to the tentative conclusion that oil would hit $150 within the next 15 months, and that this oil spike would bring a massive stock market rally to a conclusion and then provoke a resurgence in gold (which we predicted would soften until some time around the 2012 US elections). Continue reading

Another Look at the Copper/Oil Ratio—Or Is It the Oil/Copper Ratio?

Yesterday, we argued that by juxtaposing Leeb’s Oil Indicator, our Oil/Gold Indicator, and Klombies’s copper/oil ratio, we could make fairly accurate medium-term predictions of the oil price.

The most predictive of these tools is the copper/oil ratio, although I am only able to test this back to a period of a little more than a decade. Also, Klombies’s technique missed out on the 2009 oil spike, which had been predicted by our combined oil and gold system (i.e., our combination of Leeb’s Oil Indicator and our Oil/Gold Indicator, all of which requires a more convenient name). But, this 2009 spike was a unique situation, one we argued occurred only once before, under the virtually identical conditions of the 1970s. So, there is no reason to chuck out Klombies’s copper/oil technique, until we can get longer term data.

The question which now confronts us is, if copper tells us what oil is going to do, is there some way to predict copper? Continue reading

Can We Predict Crude Oil? Leeb’s Oil Indicator, the Oil/Gold Ratio, and Klombies’s Copper/Oil Ratio

The following chart should do something to emphasize the importance of the price of oil that we argued yesterday, especially through the lens of Leeb’s Oil Indicator. Each of the recessions marked on this chart is preceded by an oil spike, except the 1982 recession, which was apparently the product of tight monetary policy. On the flip side, the only 80% increase in year-on-year oil prices that did not result in a recession was the 1987 spike that provoked the market crash. Continue reading

The Oil/Gold Ratio: You Wouldn’t Believe Me If I Told You

The economic commentary I dabbled in in previous posts became rather boring, because my analysis of markets is based on a trading system I developed a couple of years ago. Although it is fun trying to anticipate what my trading system will say in the future, for the most part, my analysis of markets as they stand at any given moment is just the product of application of that system. Continue reading