The
46th Mississippi
Infantry

The circle of fifths shows the relationship between chords. The two chords nearest each other are the major chords in a given key. The next nearest three chords (going clockwise) will be the minor chords in that key.
So, for the key of G, we see that G, C, and D are the major chords and A, B, and E are the minor chords.
This should look familiar as most folk, blues and rock music are based on the progression of  I - IV - V. See the Transposition Table on the previous page.

This circle also includes the number of sharps (#) or flats (b) in a given key. By quickly looking at the Key Signature you can determine the key of a particular piece of music. In this way you know what chords are most likely to be used to play the song.