Health Check – the Copper/Gold Ratio

Checking in on the Copper/Gold Ratio and if it is Oversold on a Weekly basis because its coincides with a “low” in the S&P 500.

We saw the most recently occurrence in June 2022.

We can also look at the Copper/Gold Ratio as an indicator of the economy’s health.

A glass half-full suggests the economy currently isn’t ‘too sick’

A glass half-empty view ponders that the economy is heading into sickness.

There is no written rule that the Copper/Gold Ratio needs to ‘double dip’ into Oversold territory again. It may already have done its ‘sickness’ signalling and we haven’t seen it make such a double dip before.

Would would it take to do so?

One scenario would be to see the Copper price trade to $3.00 (12% lower than today) while the price of Gold remains steady.

My studies suggest this is plausible while Copper’s medium term trend remains downward.

It’s worthy to note that the Copper/Gold Ratio (HG/GC) correlates well with the direction of interest rates and currently there is a notable divergence occurring, with U.S. 10 year bond yields drifting higher and apart from the HG/GC.

That’s for another post.

October 17, 2022

by Rob Zdravevski

rob@karriasset.com.au