Dr Copper in the house

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I came across this quote from Alfonso De Pablos from All Star Charts:

“Copper vs. gold is a key barometer for risk appetite and economic strength. Every time it’s dropped to these levels over the past 16 years, buyers have stepped in… I can’t think of a more logical place for it to begin outperforming gold than right here.”

I have never really heard much about this ratio before, so I decided to do some of my own analysis. The green line is the ratio of copper to gold. The blue line is copper.

Here is my 5 copper cents worth. There seems to have been a very strong relationship with this ratio in the past; I go back to 1980. It seems this relationship has broken down over the last 5 or so years.

I looked at the relationship with the ratio and gold and couldn’t see anything really. Maybe 5th cousins twice removed.

In summary, the relationship between the copper-to-gold ratio and the copper price has been strong over many decades. Not so much in the last few years. I wish I was as confident as an All-Star, the only logical conclusion I can come to is I have no clue what to make of the idea of copper outperforming gold.

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My temperature is back to normal, but there may be some delirium left in the system.

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There were so many new ATH yesterday; the one that I think deserves special mention is Bitcoin. Michael Saylor must be as drunk as a sailor on his good fortune. I still think gold is the more responsible play on currency debasement, but Bitcoin cannot be ignored.

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