The falling Gold/Copper ratio indicates that global economy may not be growing as expected, according to a weekly report from ETF Securities Ltd.
Weaker than expected US and China ecnomic data and the growing Russia-Ukraine crisis apear to have changed investor riks perceptions, ETFS said.
More recently a China corporate bond default has raised concerns about a possible unwinding of copper collateralised financing deals. The combination of these factors has driven the copper/gold ratio sharply lower. Copper/gold ratio is sometimes viewed as a leading global economic indicator.
The question now is whether continued strong
consensus global growth forecasts are now going to need to be scaled back, ETFS said.
consensus global growth forecasts are now going to need to be scaled back, ETFS said.
The present scenario seems to be vastly different from the beginning of 2014 when higher stock prices, strong economic growth, higher bond yields, a stronger dolar and lower gold rices were some of the key consensus expectations.
Copper declined after data showed that China's services sector grew at its slowest pace in nearly nine years in July.
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