Gold and copper are diverging in significant fashion. Over the past three months, the SPDR Gold Shares (NYSEArca: GLD), the largest gold ETF by assets, is up more than 10% while the iPath Dow Jones-UBS Copper Total Return Sub-Index ETN (NYSEArca: JJC) is lower by 11.2%.

Gold’s resurgence combined with copper’s collapse could be a sign that some investors are fretting about the veracity of global economic growth and that a pullback in riskier assets could be in the offing.

Higher stock prices, strong economic growth (notably in the US), higher bond yields, a stronger US dollar and lower gold prices were some of the key consensus expectations at the beginning of 2014. As we near the end of Q1, investors are beginning to question many of these ‘slam dunk’ views,” said Mike McGlone and Nicholas Brooks of ETF Securities in a research note out Monday.

The declining gold/copper ratio has, not surprisingly, coincided with a period of sustained weakness for Chinese equities amid growing fears of loan defaults and investors’ skittishness about the overall health of the banking system in the world’s second-largest economy. [Slowdown Threatens China ETFs]

“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, sometimes viewed as a leading global economic indicator, sharply lower,” according to ETF Securities.

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