Is Copper-Gold Indicator Breaking Out Again?
Chris Kimble | Oct 21, 2020 12:15PM ET
The copper-gold ratio broke above a two-year falling channel back in 2016 at (1). Following this breakout, it rallied for the next year. During that year, copper-related assets did very well.
The ratio peaked in the summer of 2018 and created a series of lower highs over the past two years.
The strength of late has the ratio attempting to break above dual resistance at (2).
If the ratio continues to push higher and succeeds in breaking out, copper, Basic Metals (NYSE:XLB) and Freeport-McMoran Copper & Gold Inc (NYSE:FCX) should experience nice upside action.
Bonds would most likely get nervous if this ratio continues to plow higher. If the ratio does remain strong, iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) should perform poorly and ProShares Short 20+ Year Treasury (NYSE:TBF) should do very well!
An important long-term resistance test is in play currently. What this metals ratio does in the next couple of months, will send an important macro message to the markets.
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