Copper Sags As Gold, Silver Explode Higher

 | Feb 24, 2017 06:20AM ET

h2 The copper selloff develops nicely as base metals sink while precious metals fly

Metals are diverging as we roll towards the end of a quiet week and the month end. Metals that you dig out of the ground, melt and then make into wires, cars, machines, etc have been sagging after a breathtaking run. Metals that you dig out of the ground, melt and then hide under the bed because the world is making you nervous, have found a new lease of life.

As I touched upon yesterday, copper, despite the ongoing supply disruptions has sagged along with iron ore. (Dahlian iron ore futures down -5% at one stage today!) Gold and silver meanwhile, have exploded higher overnight and the gold chart, in particular, looks very interesting.

Treasury Secretary Mnuchin is the latest catalyst to out another knife into what seems to be some serious Trump-flation fatigue on the street. Having already said earlier that a strong dollar is a reflection of America’s economy.

He waded into overnight to say that labelling China a currency manipulator is not a done deal and that a “process” would be followed. After no mention of the border tax, he stuck the knife into the make America great-ists by pushing back the timing of the tax reform package to somewhere near August.

All of this seems to put him in direct conflict with his Boss’s view of the world. All eyes will now turn to President Trump’s address on Tuesday for something wonderful and tremendous to right the ship. The effects are two-fold, though, with the increased uncertainty adding to a lot of other uncertainty in the world and giving safe-haven trades such as gold and silver a boost. On the other side of the coin, the increasingly distant artificial Trump boost to the economy via tariffs, lower taxes and infrastructure has deflated already richly priced industrial metals.

Here's a look at the charts today.

h2 Copper/h2