This is the chart that tracks companies on the Shanghai index. This is the S&P created index and for now, is the best I can track the Shanghai index with. I’m convinced that any fundamental news that comes from China is controlled by China’s highly efficient propaganda machine.
The fundamentals in China are far worse than anything you may have been reading. It’s not rocket science but the Chinese economy is slowing much faster than we think. China is a nation of zombie, companies, banks, and cities. I could go on and on but the short version is that China is all built on debt, and so far has broken all records making the 2008 crisis seem like a walk in the park.
The peak in 2008 matches a major peak in most of the commodities, which I think is wave 3 in Cycle degree. The bear market has been going on for about 10-11 years and I see it far from being finished before any huge bullish phase comes down the pipeline.
Right now the two trend lines put the Shanghai index in no man’s land and that the present rally is just another bear market rally. There is a very convincing inverted zigzag I see and they usually get completely retraced. Mind you that could still take a few years to play out especially since solar cycle #24 is still running.
I don’t have a big Gold/Shanghai ratio database accumulated, but enough to give us some extreme readings. A low ratio means that the Shanghai index is cheap when compared to gold.
Today this ratio sits at 2.37:1, which is down from an extreme of 6.61:1. In 1996 this ratio was 1.29:1 and the Shanghai may even come back to this cheap ratio.