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"

Copper Update: Compressed Spring Could Snap Back Hard

I’ve had a bearish outlook for copper for the past 2 years, starting with my post back in September 2017 when I had doubted the metal’s ability to sustain a long-term rally. Last July, we got the final confirmation of the trend reversal to the downside. And this past February I shared with you a promising trading opportunity, which had appeared in the copper market as the short-term upward correction invited the bears to sell the copper again around $3.

Indeed, copper has plummeted since then reaching the $2.48 low at the start of this month, but the following rapid bounce into the $2.70 area signaled a possible reversal ahead.

Let’s check the charts below to see if we can find some clues behind this worrisome price action.

I start with the weekly chart as I spotted a bullish pattern there already.

Weekly Cooper Chart
Chart courtesy of tradingview.com

As I said above the price printed the low of $2.48 and quickly reversed then. I added the Fibonacci retracement level of 61.8% to the chart, and you can see now that the price bounced right off it. In my February post, I applied AB/CD segments to set the target area for an anticipated drop and even used the extension ratio, where the CD is even larger than the AB segment. Continue reading "Copper Update: Compressed Spring Could Snap Back Hard"

Copper Trade: Stopped Out

A month ago I got the short entry trigger in the copper futures. The idea started to emerge this February, and I was watching copper closely from that time and posted updates for you. And you witnessed how I moved entry triggers higher and higher until the price has finally pushed below the last one. And this was the true benefit of avoiding simple guessing to wait for the signal.

In the chart below I would like to show you how that trade was managed and what the outcome was.

Copper Futures Daily Chart: Walked Away Without A Scratch

price of copper
Chart courtesy of tradingview.com

The price of copper showed great volatility around the entry level (blue line) moving within a 10 cent range between $2.87 and $2.97. This happens due to a clash of opposite market forces at the extreme levels. Finally, the bears took the ball and pushed the price not only below the range but also below the crucial orange trendline support. Copper has hit the one month low at the $2.8345 on the 25th of March. At that stage, the short position had a profit of 3%, and I moved the stop to breakeven to enjoy the safe ride. This is a part of trade management as we should try to avoid risks as much as we can because we cannot control the market; we can only control ourselves and manage our risk. Continue reading "Copper Trade: Stopped Out"