Chris Kimble from Kimble Charting Solutions – Fri 18 Dec, 2020

Copper/Gold Ratio vs 10-Year Yields: Time To Play Catch Up?

This posting was send to me by our good friend Chris Kimble over at Kimble Charting Solutions. Click here to visit Chris’s site. Chris does a great job of simplifying charts and pointing out market imbalances like the one noted below.

Commodities prices have been very strong for the past several months. And this has many investors eyeing the prospects of a new wave of inflation and the potential for rising interest rates.

One commodity that has been particularly strong in 2020 is Copper. In fact, Copper has been so strong that it is out-performing the price of gold this year (which is also having a great year!).

But the rally in Copper prices is testing a major price resistance area – We highlighted the multi-month rally (and current price resistance) a couple weeks ago. So what happens if commodities like copper and gold take a breather?

Enter today’s chart, a look at the Copper/Gold price ratio versus 10-year bond yields (i.e. interest rates). The correlation between these two has been decent over the past several years, reverting to the mean whenever one gets too far ahead of the other.

Back in 2018, bond yields were out-performing the Copper/Gold ratio by a wide margin. The ratio ended up reverting to the mean and catching up to the downside at (1). Today we have a similarly wide margin, but the situation is reversed with yields lagging at (2). So, is it time for yields to play catch up?

With Copper testing resistance, there is a chance that the “catch-up” could come from bond yields. And that would mean rising interest rates. Stay tuned!

Click here to visit the Kimble Charting Solutions site and consider signing up for his free email update list.

  1. On December 18, 2020 at 10:04 am,
    Dick Tracy says:

    Chris Vermuelen talks up Silver on Sprott’s Weekly Wrap Up. DT

  2. On December 18, 2020 at 11:04 am,
    russell hamilton says:

    yes COPPER AND GOLD MARKETS ARE IN UPTREND .. manuy of my silver and gold mines are also partial copper and zinc mines one also is a lead miner. see politics for my comments today love and good health to you all rsh