Doctor Copper, Old Man Gold and a deterioration of inflated markets

The copper price is tanking, and not just nominally

As the upcoming FOMC is forced by market signals to keep its hawk suit on (as of today 54% of CME traders now expect a 1% rate hike with the remaining 46% in the .75% camp), global financial markets are bending to the pressure of Fed policy.

The daily chart of copper futures is eyeballing the key $3/lb. level after losing support at 3.30.

copper price (futures)

The weekly chart shows strong support at around 2.85. But this is the kind of damage we have expected in order to flip the macro counter-cyclical and anti-inflationary. It’s just one commodity asset, but it’s one that ingrained in the average market participant’s head as to its importance. Doctor Copper and his PhD in Economics and all.

copper price (futures)

In relation to the old monetary man (gold), himself not doing well nominally, you can see that the negative signal is in full effect for global macro markets and speculations.

copper price/gold price

We’ve reviewed a chart showing the negative implications of a declining Copper/Gold ratio (CGR) on stocks (now well into a bear market). But how about this more inflation/commodity-centric picture? The declining CGR imply an at least interim halt to the rising 30yr yield and eventually, if the ‘last inflated man standing (Energy)’ continues to fade that pressure would probably crack the CRB index beyond the normal correction it is current getting.

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This Post Has 7 Comments

  1. Michael B

    In my humble opinion, this post should have been ‘upgraded’ to NFTRH+. Not sure why it wasn’t.

    1. Gary

      Point understood and respected. The reason I post it now is because it is representative of things we’ve been working on for many months and the situation has already cracked and we should be adjusted to it well ahead of time.

      In other words, a lot of damage has already been done by the implications of the above. I don’t think it has been acutely actionable for 1.5 months now.

      1. Michael B

        A non-reply reply. Great. I stand by my comment and remind you of the difference between (+) and non- (+) blogs. But I blogress…

        1. Gary

          Tell me what that difference is in your view, Michael. Sometimes I feel as if I am robo-plus’ing subscribers with too much information. If this post is no longer actionable to the degree that subscribers were way ahead of it I don’t see the issue. But you are my customer and you know what they say, customer’s always right.

  2. Mike C

    “The declining CGR imply an at least interim halt to the rising 30yr yield” I assume that means on an interim basis (does interim mean until the next rate hike?) you’re thinking an ETF like TLT is due to turn up at least temporarily?

    1. Gary

      Yes Mike. It’s best to think of it as temporary. NFTRH 713 showed a very clear pullback target (page 4). It would get the herds off of inflation but if that is the new structural trend it would be a support area (on the yield).

      1. Gary

        ‘That’ being inflation.

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