Copper Is On The Verge

Almost two years ago, in my previous copper update, I called for a big jump of the metal’s price to an ambitious target of $4.65 in the quarterly chart. I put it below to refresh the memory.

Copper Chart

Firstly, the price collapsed to pierce the double support shown in the chart. Only after that, it quickly rebounded to the upside as it hit the preset target of $4.65 this May. I hope you enjoyed that long rally.

Another model, posted almost three years ago within an educational experiment advanced very well, although it did not hit the target yet, as did the pattern shown above. That charting exercise drew a lot of attention and feedback at that time. Moreover, the majority of readers bet on this well-known pattern. Continue reading "Copper Is On The Verge"

Metals Ratios Continue To Indicate Inflation

And that is welcome for monetary and fiscal policymakers of course since inflation is the only trick they have up their sleeve to bail this mess out once again. And this is no comment on COVID-19. The economy was slowly decelerating last year well before COVID-19 showed up.

The yield curve bottomed and turned up in August of 2019 as manufacturing was slipping, long-term yields were tanking and other economic signals were fraying in the wake of the trade war. So please, no convenient COVID excuses.

See: Yield Curve Hits New 2019 Steepener Today

They were preparing to inflate because the Continuum told them to prepare. COVID-19 dropped the final hammer on the situation and brought the inflation on quicker and more intensely than might have otherwise been the case.

30 year yield

So anyway, on to the lovable Amigos. Continue reading "Metals Ratios Continue To Indicate Inflation"

The Copper/Gold Ratio Would Change The Macro

The Copper/Gold ratio is saying something. That something is that a cyclical, pro-inflation and thus pro-economic reflation metal shown earlier, remaining nominally positive on a down market day has, in relation to gold, taken out two important moving averages (daily SMA 50 & SMA 200) and is currently riding the short-term EMA 20 upward. RSI and MACD are positive.

Copper: Pro-cyclical inflation, pro-reflation, pro-economy.

Gold: Counter-cyclical, monetary, with inflationary utility.

Given the right circumstances (like desperate monetary and fiscal policy), which are in play on the wider macro, gold will probably do quite well moving forward. But maybe – for a while – not as well as some commodities if the Copper/Gold ratio really is up to something positive here.

copper/gold ratio

Side note: the Palladium/Gold ratio is on the verge of going positive as well and of course the daddy of inter-metal ratios, the Gold/Silver ratio is still on a big picture breakdown (Silver/Gold has broken above a key long-term resistance marker). So you might want to look at these three metallic indicators together (along with more traditional non-metallic inflation indicators) in gauging the process toward inflation. Continue reading "The Copper/Gold Ratio Would Change The Macro"

Updating The 3 Amigos And The Global Macro Message

This morning in pre-market the Amigos’ futures charts update the macro story…

global macro

…which goes something like this…

Copper, the cyclical Amigo (weekly chart) has furthered the intermediate trend line break we noted on October 25th. This is in line with the rally in US and global stock markets and even more so, the global macro reflation theme. It does not look so impressive yet on this weekly chart, but other components of the macro trade are starting to look impressive, especially on daily charts. So… steady as she goes. Continue reading "Updating The 3 Amigos And The Global Macro Message"

Silver & Gold To Inform Dr. Copper

They call copper the metal with the Ph.D. in Economics. But these days Doctor Copper is little more than a quack in that regard, taking a cue from the metals whose interplay will be critical to deciding the coming macro for 2020 and the run-up to the next US election. Thus, they are the 3 Metallic Amigos, riding together but providing different signals at different times (this being nftrh.com, you will have to put up with the odd shtick from time to time).

Silver Gold Copper

As we have noted repeatedly, the Silver/Gold ratio takes it place alongside other indicators (like long-term Treasury yields, yield curve, TIPs ratios, inflation breakevens, etc.) of a would-be inflationary environment. When silver (more cyclical, commodity-like characteristics) rises vs. gold (more counter-cyclical, liquidity haven characteristics) it is a hint toward an inflationary macro.

A daily chart of silver/gold shows a constructive ratio at yesterday’s close and this morning in pre-market silver is +2.77% while gold is +.77%. The implication could well be an end to the current bull flag consolidation at the moving averages and the next upturn in silver/gold, the miners and possibly the inflation/reflation trades that tend to follow. Continue reading "Silver & Gold To Inform Dr. Copper"