Isn't the USD Supposed to Drive PMs?

Isn’t the USD Supposed to Drive PMs?

A few weeks back we plotted the Yen against various PMs in this post and suggested the latter had to “catch down” to the former given 1) they have tended to act as leading indicators for one another’s fair value, with leadership roles reversing every so often, since the global commodity bull began in 2002 and that 2) the Yen had recently succumbed to material downside.

Specifically, we asked if based on the Yen’s value at the time, that gold was really worth $1,200 and not the $1,600 it traded at.

In retrospect, the Yen clearly sniffed out the oncoming PM weakness correctly.

We update the chart below.

Is the Yen correct and are PMs still that expensive vs. the FX’s suggested fair value for them?

Weren’t we taught that the USD drives PMs?

2013-04-18 Yen - Gold - Silver - Daily