3 Metallic Amigos give their signals (Amigo #3: “Ruh Roh!”)

This is not just another ‘Amigos’ update, as you will see near the end of the post. As usual, we’ll go with daily charts on the gold price futures, silver futures and copper futures with a weekly chart added for Doctor Copper because that has really been the view we’ve been interested in for the cyclical Amigo.

Amigo #1 (Gold): Counter-cyclical character & risk off

There has been a negative divergence by RSI to the marginal new high in the gold price. This is no great technical shakes here on a daily chart, but it was due for at least a test of initial support at the up trending 50 day average.

The next key support for gold would be the up trending 200 day average at 1495. Aside from the chart, the issues I have had with gold are its close tie to Treasury bonds and its all-in large Specs contingent in the CoT. But this chart? Intact.

gold price

Amigo #2 (Silver): Cyclical & counter-cyclical character w/ more industrial uses and cyclical inflation sensitivity than gold

Silver did what so many US and global stocks have done, which is to break below the daily SMA 50 and/or the SMA 200, bounce to test them and then fail. Today it is taking out the 62% Fib retrace level, which I had thought could contain its correction. Well, no.

Silver now opens up the support level at 15.50, which includes the 78% Fib. Aside from the technicals, we are not going to get an ‘inflation trade’ signal until silver starts to lead gold. And even there, that would be an early inkling for an inflation trade, as it could come while the herds are still thundering with panic.

silver price

Amigo #3: Cyclical and of risk ‘on’ character

Finally, the one that I think is most telling today. The ‘Air Gap’ is finally being entered today after the bearish, down-trending Doctor Copper had for so long resisted its gaping maw.

copper price

“Ruh Roh!” says the chart but really, every Amigo update we’ve had lo these many months (most recent was March 5th) has been projecting this to happen and now if today follows through, it finally is happening. And do you know what? It could be climactic. There should be no surprise or panic when things you’ve looked ahead to come about. That’s for the herd, not you and me.

Welcome to Deflation Scare 2020. Doctor Copper will be your host. When holdout indicators like this finally trigger it is a sign that things are heating up and casino patrons need to be at attention for coming changes.

copper price

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