I appreciate Michael A. Gayed's thesis here, but the more I look deeper (and longer term) at the data, it's really difficult to draw an real signal. Too many instances where it's not clear which influences which and more likely the market itself (SPX) is influencing lumber and gold independently after the fact of the market move.
When you look closely you can see that the peak of the Lumber:Gold ratio is when both are very low but Gold is lower than Lumber. The conditions of the two are all over the place and it's not something that seems to have truly repeatable conditions.
Conclusion: I'm open to being wrong here, but I just don't see it as something people should take too seriously especially when gold might be taking off at the same time lumber is. Simply looking for a peak in lumber is probably more valuable here.
I agree that this is interesting but not really meaningful as the largest users of lumber are well hedged vs fluctuation and fluctuation was extreme and extremely short term - indicating the lack of a fundamental drive of lumber’s price increase
TMoneyBidness
⋅
Thanks for looking into this! I've done a similar analysis and found it to be somewhat reliable (mostly for sentiment only, the more I look into it). Keep up the great work!