Gold and copper is a story of princes and paupers: the latter is the world's go-to industrial metal, used for everything from wires and piping, to the braking system in your car; while gold, on the other hand, is the star-child of the precious metals. Apart from both being widely traded commodities, they don't have much to do with each other--which is exactly what makes their parity (or lack thereof) so intriguing. In fact, the Gold/Copper Ratio (no, not the "Golden Ratio") is considered to be one of the most important economic indicators, but why?
As mentioned above, gold is the most widely traded metal commodity, with a volume of 3.5 million contracts traded in December 2016 . Furthermore, gold is considered to be a save-haven for investors during troubled economic times due to its history as a backing for currency (and its earlier history as an actual currency itself), which stems from its finite amount, portability, and (relative) price stability. When most investors talk about trading gold, they are doing so to take advantages of investors' fears, as the increase in demand (due to a negative outlook for the economy) will increase the price.
Copper, however, operates in the opposite way. Copper's many applications in manufacturing leads to its price changing as manufacturing changes. That is to say, when manufacturing around the world increases, there will be a higher demand for the finite supply of copper. As with many of these indicators, when you see the price of copper rise over time, you can conclude that there has been an increase in the level of manufacturing.
Taken together as the Gold/Copper Ratio, one can see the overall health of the economy through an inflation-free lens. How is it inflation free? Well, when taking copper as function of gold (AKA x lbs of copper per oz of gold), you are dividing pounds of copper by ounces of gold and therefore eliminating inflation (since division eliminates the common factor: currency). So, in simpler terms, you really don't care how much the the gold is worth at the store, you just care how much copper you'll get in a trade.
How is it represented? Well, the cost of gold far exceeds the cost of copper (gold is $1,219.40 per ounce, while copper is $2.63 per pound, or $0.16 per ounce, at time of publication), so it is customary to see Gold/Copper as the metric as you'll be dealing in whole numbers. In this case, a high Gold/Copper ratio indicates a bearish outlook, while a low ratio indicates a bullish outlook. If you were to flip the ratio around to indicate Copper/Gold (ounces of gold to pounds of copper), a high ratio would indicate a bullish outlook, etc.
The ratio, however, is more of a barometer than a metric (at least in the most traditional sense). Though it would be accurate, one would not say, "Wow, Gold/Copper is really high today." A more suitable statement is one that compares, such as: "Wow, Gold/Copper really surged over the past three months." This is because the cost of copper and the cost of gold are affected by many more factors than simply buildings and investor fear; therefore looking on a local, or even a case-by-case, basis will allow for a better analysis. Take, for example the Gold/Copper Ratio is currently 463.65 lbs Cu (copper) to 1 oz Au (gold), but was 567.54 lbs Cu/oz Au on November 7th, 2016. Furthermore, one can look at historical data from economic downturns, such as 607 lbs Cu/oz Au in 1980 and 700 lbs Cu/oz Au in 2008.
However, as you can see above, fortunes have been changing for the indicator. Since September there has been a considerable decline: from a high of 640 lbs Cu/oz Gold to its current TTM low. What does this mean for the overall economy? Perhaps things are looking up for us in the coming months. As we know, when manufacturing increases, it drives economic growth. The only downfall is that, since copper and gold also create "rose gold", you may have to spend more to accessorize with your new iPhone...