Copper/Gold Ratio At Epic Decision Point

Copper/Gold ratio teases cyclical inflation bulls and bears alike, but… it’s going to break one way or the other soon enough.

If you value gold’s standing in relation to industrial metals as a key market/financial/economic indicator as I do, then you view the ongoing consolidation in the copper price to the gold price as a key indicator (among several NFTRH tools) going forward.

I cannot make the macro do what I want it to do, but I sure can be super interested in an indicator that has made several false moves to the positive and negative sides in 2021 as we head into a year of changes to come (one way or another) in 2022. Cu/Au is making less and less volatile spikes and drops as it is currently pinched between the converging daily SMA 50 and 200.

They call him Doctor Copper because in the post-2000 world of Inflation onDemand © 🙂 (as originally concocted by the Maestro himself, Alan Greenspan and expanded ever so maniacally by Ben Bernanke on through the current Fed regime), the cyclical economic doctor metal is a key foil to the counter-cyclical monetary historian metal. Continue reading "Copper/Gold Ratio At Epic Decision Point"

Gold, Silver, Gold/Silver Ratio & HUI

Precious metals are still locked down. With an understanding that there is always much more in play than nominal charts (the macro & sector fundamentals for example, which bounced of late but never did definitively flip positive), let’s review said nominal charts of gold, silver, and HUI along with an update of the Gold/Silver ratio for good measure.

Meanwhile, we will continue to update the full spectrum of considerations for a positive view of the precious metals complex, including gold’s standing vs. cyclical, risk-on markets/assets, the state of speculative vs. quality credit spreads, the inflationary backdrop (despite promotions to the contrary, cyclical inflation is not beneficial to the gold mining industry), the seasonal averages and the charts of the metals and miners over various time frames in NFTRH.

Gold

The daily chart shows the gold price (futures) below the moving averages but above short-term support after failing – amid much personally observed cheerleading to the contrary – to cross the bull gateway at 1920.

As a side note, the broken blue downtrend channel on this daily chart is actually the Handle to a large and bullish big picture Cup that only has one thing going against it that I can see; too much exposure by too many TAs, which of course means it may not be expressed until many of those TAs recant their stories (we have noted all along that the Handle can drop all the way to the 1500s without damaging the 2022 bullish Cup story. Indeed, if it were to happen (not predicting folks, but being prepared) it would be healthy. There is nothing healthier than a good running of the bugs before a major bull move. Continue reading "Gold, Silver, Gold/Silver Ratio & HUI"

Gold; A Thing Of Beauty...

Gold calmly continues cobbling its Handle; Miners lay in wait.

You see, there is all this noise out there. It comes mostly from inflationists touting gold in the same breath as copper, as oil, and as commodities of all flavors (and aside from gold and, to a degree, silver, those flavors are cyclical).

But you also see, gold is counter-cyclical in its best suit. You see on this monthly chart that gold has been forming its Handle to the bullish Cup ever since the inflation trades came to the fore in the summer of 2020. Therefore, you see that those touting gold and inflation together have been wrong for over a year now (and counting).

For those dealing in reality instead of dogma, gold is a candidate to break the Handle at any time. Then it would be off to the target at 3000+ over the course of a year or more. But reality holds another option as well, and that is to finish the Handle making lower.

So why not tune out the perma-pompoms in real-time, realize that the thing is bullish, but the trigger is either coming sooner or later? We are doing that more focused work in NFTRH and associated updates every week and will be on the spot when the proper signals engage.

This chart was created in 2020 as gold spiked to an all-time high and reversed (into the then-projected Handle). Continue reading "Gold; A Thing Of Beauty..."

Gold Gets Hammered But Copper Fails To Seize The Moment

The Copper/Gold ratio remains at a key decision point. Gold has been clobbered lately but a key metallic macro indicator remains in a long-term congestion zone. If it’s going to be cyclical ‘inflation ON’ we’d expect Cu/Au to break through and do what it has not done since a major inflation trade blew out in 2006-2008, and for the 30yr Treasury yield to eventually catch on and rise at least to the EMA 100 (blue line).

copper/gold ratio & 30 year treasury yield

Here is the daily futures view of Cu/Au. Going by simple TA (daily trends) it looks poised to break out to the upside, especially in the face of a government at the ready to pump Trillions more funny munny into the economy. The economically cyclical metal would benefit over the more counter-cyclical monetary metal. It’s logical, but still theoretical. Markets do not always do the logical thing, now do they? Continue reading "Gold Gets Hammered But Copper Fails To Seize The Moment"

Stock Market Risk Not Yet Realized

The stock market is at high risk, but…

The ‘but’ is the old saying “markets can remain [seemingly] irrational longer than you can remain solvent” if you fight a trend that is intact at any given point. Since March 2020 that trend has been up.

Structurally Over-bullish

Below is a chart showing the 10-week exponential moving average of the Equity Put/Call ratio (CPCE) that we review periodically in NFTRH for a view of the structural over-bullish situation in stocks. I write structural because it has extended much longer than extremes in the CPCE have done at previous ‘bull killer’ danger points, after which risk was realized in the form of moderate to severe corrections.

The trend began logically enough at a ‘bear killer’ reading in the midst of max pandemic fear. We noted at the time that market participants were not just bearish, not just risk-averse, but absolutely terrified. So the recipe is this: take 1 lump of terrified investors, add a heaping helping of the Fed’s money printing and voila, enjoy the taste of a slingshot rally that is very filling despite its inflationary odor.

Risk? Well, when SPX took out the previous 2020 high last summer we established a target of 4400 (conservative) to 4600 (at an extreme). The market is in the target zone, CPCE has begun to labor up and out of the structurally over-bullish floor and well, it could be a signal of a later stage bull market. But a warning about jumping into a heavily active bearish position is that using the run-up to 2016 as an example, the pressure can build for months, even years before risk is realized. Another caveat to going full frontal bear is that the EMA 10 is starting to hook down again as pressure is being relieved lately. Continue reading "Stock Market Risk Not Yet Realized"