Re-acquainting with the Copper/Gold Ratio

‘No one’ is ‘long’ bonds.

‘No one’ thinks bond yields will fall.

The divergence (and expected catch-up) between the Copper/Gold Ratio and U.S. 2’s and 10’s (as shown in the charts below) aids my thinking that bond yields will decline or at least converge toward their longer term means which are sitting much lower than the current ‘price’.

Once upon a time, not so long ago, I recall investors (in various meetings) telling that me “they would take 5% any day of the week”.

Today, the consensus isn’t content and wants to squeeze interest rates higher.

I’d guess that should interest rates fall notably, there is a move in consumer behaviour, asset pricing and business that many aren’t fathoming.

August 29, 2023

by Rob Zdravevski

rob@karriasset.com.au