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Goldcopperratio

Is Copper Next to Rally After Silver and Gold?Last week, we came across news: China calls for more copper stockpiling. Therefore, is Copper Next to Rally After Silver and Gold? Why Is China Stockpiling Copper? Micro Copper Ticker: MHG Minimum fluctuation: 0.0005 per pound = $1.25 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
COMEX:GC1!Long
by konhow
1
Macroeconomic Indicator: Gold-Copper SpreadMacroeconomic Indicator: Gold-to-Copper Spread The Gold-to-Copper Spread (Gold-to-Copper Ratio) is the ratio between the price of gold and the price of copper, expressed by the formula: Gold–Copper Ratio = Price of Gold / Price of Copper This indicator shows how much the price of gold exceeds or lags behind the price of copper at a given point in time. It is often used to analyze market sentiment, assess economic stability, and identify investor preferences. Gold Gold is traditionally considered a safe-haven asset. Its price generally rises during periods of economic and financial uncertainty, when investors seek to preserve capital and reduce risk. Additionally, gold may receive support in the following conditions: weakening of the US dollar rising inflation expectations declining real interest rates increasing geopolitical risks growing demand from central banks Copper Copper is often called “the doctor of the economy” due to its high sensitivity to industrial production and economic growth. The price of copper typically rises during phases of economic expansion, when demand for commodities and risk assets increases. The spread reflects only the relationship between the two assets and does not account for other factors such as exchange rates, geopolitics, or changes in monetary policy. Copper may also rise under the following conditions: supply deficits (strikes, logistical disruptions, declining production) structural growth in demand (electric vehicles, energy transition, data centers) monetary stimulus and growth in global liquidity weakening of the US dollar speculative phases in commodity markets stimulus measures from China Rising Gold/Copper Ratio Typically signals: increase in risk-off sentiment deterioration in economic expectations growing demand for safe-haven assets expectations of recession or slowdown intensification of geopolitical risks decline in real interest rates This is usually accompanied by weakness in equity markets, cyclical sectors, and industrial commodities. Falling Gold/Copper Ratio Typically indicates: strengthening of risk-on sentiment improving expectations for economic growth growth in industrial activity capital inflows into risk assets the beginning or middle of an economic expansion It often correlates with rising equity indices, industrial metals (in a “healthy” risk-on regime, copper should rise not alone but together with aluminum, nickel, and zinc), oil, industrial ETFs (XLI), equity indices, PMI, macro data, and bond yields. The Spread Cannot Be Analyzed in Isolation Key indicators without which this indicator should not be interpreted: Real rates DXY (US dollar) S&P 500, Russell 2000, Industrial ETF (XLI), oil (WTI, Brent), aluminum, zinc, nickel, CRB Index / GSCI China: real demand or illusion — declining or growing Geopolitics All these metrics can be found on TradingView. It is recommended to create a separate watchlist and monitor them there. The Spread Is Falling This means copper is stronger than gold. The base hypothesis is that the market is shifting into risk-on mode. We then verify this using other indicators. 1. Real Rates Real rates are rising - gold is under pressure, the spread falls for a “healthy” reason. This confirms that the market truly expects economic growth. Real rates are falling, but the spread is still falling - copper is rising too aggressively. This is not a macro growth signal, but rather a sign of copper supply deficit or speculative acceleration. Conclusion: If the spread falls while real yields are rising, this is a strong, clean risk-on signal. If it falls while real yields are declining, distortions are already present. 2. DXY (US Dollar) DXY is falling - supportive for commodities, copper’s strength looks logical. This confirms a risk-on environment. DXY is rising, but the spread is still falling - copper is rising despite currency pressure. This is often a sign of a local copper deficit or an artificial squeeze. Conclusion: A falling spread with a weak dollar is a normal macro scenario. A falling spread with a strong dollar is a reason to be cautious. 3. What Should Happen in Other Markets If the decline in the spread reflects true risk-on, typically: S&P 500 is rising Russell 2000 is rising faster than S&P (increased risk appetite) Industrial ETF (XLI) is in an uptrend Oil (WTI, Brent) is strengthening Aluminum, zinc, and nickel are rising together with copper CRB / GSCI commodity indices are moving higher Key point: Copper should not rise alone. If you see copper rising, equities flat, oil weak, metals not confirming then this is almost always mean that not macro growth, but a local copper story (supply shock, squeeze, speculation). 4. China: Real Demand or Illusion Copper is almost impossible to interpret without China. China PMI rising + credit impulse rising + yuan strengthening copper growth is fundamentally confirmed a falling spread = healthy risk-on China PMI falling + weak economy, but copper rising this is not macro demand it is either a supply deficit or speculative flows Conclusion: If China does not confirm copper’s move, the decline in the spread loses its macro meaning. The Spread Is Rising This means gold is stronger than copper. The base hypothesis is that the market is moving into defense (risk-off). But confirmation is still required. 1. Real Rates Real rates are falling - gold rising is logical. If equities and commodities weaken at the same time, this is true risk-off. Real rates are rising, but gold is still rising - the driver is not monetary. This is usually geopolitics or fear of systemic risks. Conclusion: Rising spread with falling real yields = classic macro risk-off. Rising spread with rising real yields = the market is genuinely afraid. 2. DXY (US Dollar) DXY is rising - pressure on commodities, support for gold - the rising spread looks logical. DXY is falling, but the spread is still rising - gold is rising too strongly. This is most often a sign of fear, geopolitics, or systemic hedging. Conclusion: Rising spread with a strong dollar = standard risk-off. Rising spread with a weak dollar = a warning signal. 3. What Should Happen in Other Markets If the rise in the spread reflects true risk-off, typically: S&P 500 weakens or moves into correction Russell 2000 falls faster than S&P XLI (industrial sector) is under pressure Oil weakens Industrial metals fall CRB / GSCI move lower If instead gold is rising, equities are rising, oil is holding, commodities are not falling, then this is not classic risk-off. It means gold is rising for its own reasons (rates, geopolitics, hedging). 4. China (PMI) Chinese data weakening + copper falling the rise in the spread is fundamentally confirmed the market truly expects a slowdown Chinese data strong, but copper still weak the issue is not demand, but other markets the spread signal is distorted Geopolitics in the Interpretation of the Gold/Copper Ratio and Markets Geopolitics is a factor that breaks the normal macro logic of markets. It is not directly linked to the economic cycle, but it sharply changes capital behavior. If macro indicators reflect “slow” processes (rates, growth, inflation), then geopolitics represents shock events that trigger fear, defensive positioning, risk aversion, increased demand for liquidity That is why it is always considered separately from macroeconomics. How Geopolitics Affects the Gold/Copper Spread In most cases, geopolitics, strengthens demand for gold, weakly supports copper, therefore pushes the spread higher But the key point is: this is not because the economy is deteriorating, but because investors are hedging against event risk. That is why a geopolitically driven rise in the spread often is not confirmed by falling equities, is not accompanied by worsening PMI, does not coincide with changes in interest rates Enjoy!
Education
by LonesomeTheBlue
1
Gold-Copper Ratio, (very) LONG; This WAS the top of equities ...... most likely. Let's reason for a second. (Despite all the noise out there.) The title chart is the Monthly Gold/Copper Ratio, e.g. is very powerful. (It does not tend to turn on a dime!) This has just completed the month of Jan. 2021. 1) It has finished the month by completing a Bullish Hammer, bouncing off of the (very) round number / level of 500; 2) It did so exactly at the 78% retracement of the March 2020 highs - i.e. Pandemic equity lows; Then, instead of continuing down (equities continuing to rally) it did turn "on a dime" and finished in a Bullish Hammer - raring to go higher, i.e. equities lower. 3) As of this moment, the above picture, provides one with two distinct possibilities. a) That massive (Monthly!!) Bearish Deep Crab is going to bear down it's target at the - very - round 1000, e.g. sending the SP500, Dow and Nasdaq to a better than >65% Decline; (Most likely!) b) This ratio is going to trace back, close to the March, 2020 highs - Pandemic Equity lows - where it's going to reverse and rise, once again. I.e. The test of the March, 2020 equity lows are going to hold. Either way, the significant take away here is this; Unless these most recent Equity Index highs are taken out very soon - e.g. with this next month - Equities are headed strait to test the March, 2020 lows, where the obvious question remains: Will those hold? Have a nice day and stay short equities! Here is the Weekly chart;
COMEX:GC1!Long
by Nemo_Confidat