Copper-Gold Ratio Calls For 2pc 10yr

Since 2008, the current level of the copper-gold ratio calls for tehr 10-year yield being above 2 percent. At this juncture, the immediate signal is short copper or short the 10-year bond, because either the ratio or the 10-year yield will close this gap. The longer-term bullish/inflationary view is that inflation is indeed coming and rates are still too low. Rates will rise and after an adjustment, the bull rally in various assets will resume. Tech is probably done as a leader though. If copper and interest rates "meet in the middle", that would be bullish for the inflation scenario.

The bearish interpretation says the post-2008 trap is alive and well, copper prices will peak and reverse as they did in 2011, 2014, and 2018, with rates eventually following.

I have bets on both sides right now, I'm long copper juniors and have short-term puts on copper majors.

Copper could retrace more than 10 percent from its high and not dent the uptrend from the March 2020 low.