NFTRH; Base Metals

In NFTRH 292 we reviewed this chart with some thoughts…

gyx

“One speculation that may be constructive now is the base metals, which feature a sharply
rising Nickel, a firm Copper and an interesting (though not yet activated) pattern on
GYX.”

Here is the same chart a few weeks on…

gyx.2

Of interest is the DBB ETF, which I have seen show up in a few places as being in an Inverted H&S, as with our original highlight of the index it tracks, the GYX.

dbb

While irregular, the pattern has broken above what could be considered a neckline and the surge of the last several days goes well with that in silver vs. gold.

Indeed, with reference to our extended silver vs. gold discussions in this week’s report, if it turns out that silver’s leadership over gold continues expect the macro to go ‘inflationary’ and commodity items like the base metals to break out and perform well.

If on the other hand gold, deeply over sold vs. silver on a daily time frame were to reverse and take leadership then an anti-inflationary phase – even if only as a short term reaction – would probably be the play.

Shorter term charts of copper and some copper stocks are doing bullish things, so we will respect that.  But we should also respect this big picture chart until such time as it starts to repair its breakdown by getting above 3.25/lb. at least.

copper.mo

Bottom Line

If the picture turns pro-commodity inflationary, the base metals could be a prime player.

If not, then the current bounce could fail in line with silver’s ratio to gold.

Watch silver vs. gold.