Copper and Copper/Gold continue the dark messaging
These things take longer than you’d think when you initiate the analysis at its start. It was about a year ago that I began watching for negative divergences to the inflation that even then was front page news.
Then economic Doctor Copper embarked on a forever sideways journey of ups and downs before finally breaking down for real in June. Support is not visible on the daily chart but the copper price (futures) is now targeting 3 bucks/lb at the 2018 high.
The cyclical/counter-cyclical ratio of copper to gold has chosen its path, down, after biasing that way since the start of 2022.
My view continues to be that the ‘inflation’ stuff (commodities, resources, etc.) and secondarily, the ‘reflation’ stuff (financials, materials, etc.) are the most vulnerable in this environment of hype-unwind. For all the reasons belabored to the deaf ears of most gold bugs, gold, silver and the miners are also vulnerable during an acute anti-inflationary event.
I know the inflation is real, by the way. I watched and wrote about its creation by the Fed in Q1-Q2, 2020. But by hype, I mean that the public has long-since been fully briefed on the matter and the public is always months behind the curve. Now a year in the making, the likes of the chart directly above are signaling something quite different, at least on a painful interim basis.
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