The copper/gold ratio continues to be stalled where it was supposed to stall
The global economic reflation instigated by balls out inflation (steroidal money printing and subsequent cost pushing) halted at a logical caution area as indicated by the Copper/Gold ratio. This not surprisingly came as the 30yr yield, which had risen under the pressure of the determined inflation operation, formed its right side shoulder.
Now we wait for signals to the following options…
- Resumed ‘good’ inflation with yields and cyclical assets rising (along w/ Cu/Au).
- A renewed rise in long-term yields (the EMA limiters remain open, after all) but a morph to ‘bad’ inflation AKA economically negative Stagflation.
- Inflation signals continuing to abort as a blessed Goldilocks scenario (not too hot, not too cold) persists longer than the little summer cool down.
- Inflation signals start to fail and the anti-market to the global party, USD, asserts itself along with the Gold/Silver ratio for that ‘ruh roh!’ moment that always comes sooner or later. This likely would involve tanking yields but there is also a less favored theory that deflation could involve rising yields and boy, that would be nasty.
It’s mid-summer and the market is grinding every day now. What will prove to be the real trend coming out of this grind may take a while to assert. Dem boyz is in da Hamptins sippin’ dem magareetahs after all. But the machines are always on the job. So, it’s best to stay open minded about the timing of the signals.
But one thing is certain. Copper/Gold came to a logical dwelling point. From this point it – and its fellow macro indicators – will make a decision, and ideological inflexibles are not going to be able to fight that tide if the decision goes the way opposite to their biased dogma.
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