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Wednesday, November 30, 2016

Yen and Commodities

People draw correlations where there are none, at least not consistently.
While Yen and Gold have had a buxom buddy friendship of late, they were not always joint at the hip, or the boobies.

Between 2001 and 2008 the Yen Index was up 7%, while commodities (as defined by CRB) had their biggest 8 year rally.
Oil was up 14 fold during this time.
In 2008-2009 Yen had a big spike and was up 20% while commodities crashed.
Between 2009 and 2012, Yen Index went up another 15% while oil moved from $35 to $100 and most commodities did very well.
Between 2012 and mid 2014 Yen Index went down 20% and commodities stayed flat.
Between late 2014 and 2016 Yen index went down another 15% and commodities crashed.

I dare you to find the correlation between Yen and the CRB from the above data.


  1. Glad to see your ideas here and at Gary's site. Don't let the small minded shut you up. The market for the past 8 years has been about discovering relationships no one else sees -- which you seem to understand.

    1. Thank you! I try. And I get a lot wrong. I am happy to admit it when I screw up. Don't have the subscription overhang to prevent me from doing so.

  2. Glad to see the site, keep up the good work.

  3. The currency correlations are only worth what a currency has fluctuated. It is demand for commodities that is the over riding factor. Some investors, especially many Americans, become fixated on viewing the value of their currency as being the only thing that matters.

  4. So you marketing over at Gary's site brought me here.. cool..

    So, I get your point above.. but , the other important point is when GOLD is strongly correlated , take advantage of it!

  5. It is strongly correlated but a couple of years back very few of us saw the correlation. Now a lot of analysts have picked it up. I don't think it can last very long.

  6. I just cannot believe people are so bearish in Gary's blog after PM is so washout. They are so confused on "bottom"s and "THE Bottom". You pointed out the lists so precisely, I could not say better myself.

  7. Those news letter sellers always bash others to show them THE best. In reality, none of them are. 50% of one's portfolio with 3X etf?? It is just crazy. No wonder, HE is not using his true name LOL

  8. By nature, people intend to assume the trading ideas which they agree upon (or less painful) are right, myself included. But this is dangerous..

    They should assume there will be tomorrows.
    They could be deadly wrong for some tradings even sometimes, they were right, they would still lose hell lot of money.


    1. Excellent point. One of the strongest biases...confirmation bias.

  9. Unless people had understood risk/reward, they should not be even trading. For that point, I find myself lot more profitable to trade ENB and CNI than GDX.