The Eureka Miner: copper price

Showing posts with label copper price. Show all posts

Saturday, April 29, 2023

Gold $2,450 in the Next Several Months

Eureka Shadows from the Past

Saturday, April 29, 2023 AM

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I'm in good health at 75, “rumors of my demise have been greatly exaggerated.”

That's almost an exact quote from Mark Twain, it has been tweaked some over the years. Good enough for ranch work!

After a two-year hiatus, the ole Colonel couldn't help but jump back in to put his two bits on future gold prices. Here's what Chief Editor Neils Christensen said in this his Kitco Weekly Gold Survey:

"Looking beyond U.S. monetary policies, Richard Baker, creator of the Eureka Gold Miner's Report, said that the ongoing debt ceiling debate poses a significant economic risk and could support gold prices.

"History may not repeat but looks set to rhyme in the next several months. The "raising the debt limit debate' will raise gold prices to $2,450 or beyond," he said. It is important to remember that a U.S. debt downgrade and not default set the ball rolling to record gold prices in 2011. Perceived inability to govern was the catalyst."

My contrarian vote was a move up to $2,010 sometime next week. Here's what I wrote in 2011 when gold prices scored a new record on the heels of that U.S. debt debate:

$1,898.60/oz Gold; $44.09/oz Silver; Miners See Sunlight Above (Eureka Miner, August 23, 2011)

Comex gold futures are presently $1,999.10 for June.

Rock on Miners!

Friday, February 19, 2021

Gold $1,785 in House of Pain; Red Metal Breaks $4.00; Silver Resilient Above $27

"Habanero"

Winter Storms Uri & Viola

Clyde, Texas

Friday, February 19, 2021 AM

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"I cannot overstate the potential harm the coronavirus can do to the world economy." (Eureka Miner, January 31, 2020)

Eureka County, NV Coronavirus Hub

Follow the ole Colonel on twitter @Eurekaminer

Next Week Target Gold Price: $1,760 per ounce, Target Silver Price: $27.50 per ounce

Morning!

Our dear friends in Clyde, Texas (outside Abilene) have seen brutal weather this week from Winter Storms Uri and Viola. The headline photo is "Habanero" toughing it out in the snow. Fortunately, they have generators, water and the donkeys have a warm place to shelter. The Eureka Miner sends its best and hopes for warmer weather!

Gold might as well be in a winter storm. The yellow metal is down from its early morning high of $1,790.9 per ounce, thankfully up from its low of $1,759. As you will see from my Kitco input yesterday, holding the $1,760-level is key or the yellow metal will really be in a house of pain. Comex copper broke above $4 per pound pound today - we haven't been at these levels in nearly 10 years! Silver has also shown considerable strength touching $27.74 per ounce before declining some:

Comex April gold is presently trading at $1,785.6 per ounce (8:32 am Eureka Time).

Comex May silver is presently $27.59 per ounce (8:31 am Eureka Time).

Comex May copper is presently $4.0625 per pound (8:31 am Eureka Time)

This is how I explained my gold and silver outlook to the Kitco Weekly Gold Survey:

[Note: my inputs are now "early bird" Thursday morning summaries]

I remain bearish on gold at least for the near term - Comex futures will likely test the lows of mid-2020 before deciding whether the trend down is over (~$1,760-level).

The lustrous metal plight is illustrated by comparison to two metals and the S&P 500. The uncommon negative correlation with silver persists on a 1-month basis, both of these precious metals are usually highly correlated in a positive sense. The copper-to-gold ratio has been in a strong trend of higher-lows since last August and is accelerating higher with copper prices breaking the $3.9 [Friday update $4.0] per pound level. I believe the gold-to-silver ratio will plumb 64 ounce per ounce next week.

Takeaway - the yellow metal is steadily losing value to the red and white. Finally, gold has been losing value to rising equities since the U.S. Presidential Election. The gold-to-S&P 500 ratio has fallen to mid-2019 levels. My gold target for next week is $1,760 with silver rising slightly to $27.50.

On the flip side, market-driven inflation expectations are still on the rise. The 10-year Treasury breakeven rate is now above 2% (2.21% 2/17 Wednesday). However interest rates still have not risen as fast as expectations, so the 10-year real rate is a negative 0.89%; the 5-year is a negative 1.83%. For a non-interest earning asset like gold, negative interest rates are potentially bullish. Gold is also considered by many to be an inflation hedge.

These are the strange times of coronavirus.

Stay safe my friends.

Chart for the Week

The ratio of copper-to-gold prices has really taken off from last October. As you can read from the commentaries below, there is a strong relationship between this ratio and interest rates.

Copper-to-Gold Ratio

The Colonel's Latest Kitco News Commentaries

Please checkout my latest Kitco News columns on the stunning relationship of copper and gold prices with interest rates:

Is silver near a top? (7/27/2020, Kitco News)

Gundlach copper-gold indicator: low volatility in unexpected places (4/28/2020, Kitco News)

Copper, gold & the coronavirus (2/18/2020, Kitco News)

Leading indicator for U.S./China trade - copper, gold & yuan (1/13/2020, Kitco News)

Is Jeffrey Gundlach right about copper, gold & interest rates? (12/23/2019, Kitco News)

Gundlach indicator: stable copper-gold means low yield volatility (11/11/2019, Kitco News)

Gundlach indicator: copper, gold & treasury yields at a tipping point (10/14/2019)

Gundlach Indicator: treasury yield and copper-gold ratio plummet (9/03/2019, Kitco News)

Robust Revival of Gundlach's 10-yr Treasury Relation with the Copper-Gold Ratio (6/17/2019, Kitco News)

Cheers,

Colonel Possum & Mariana

Friday, December 18, 2020

Gold $1,896, $1,900+ Next Week; Red Metal New High $3.64

Open Road, Lone Mountain

Eureka County, NV

If I were asked to pick two words to describe America it would be "open road."

Freedom of travel, the promise of a new horizon beyond every skyline.

These are at the very core of the beautiful experiment we call America.

Friday, December 18, 2020 AM

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"I cannot overstate the potential harm the coronavirus can do to the world economy." (Eureka Miner, January 31, 2020)

Eureka County, NV Coronavirus Hub

Follow the ole Colonel on twitter @Eurekaminer

Next Week Target Gold Price: $1,920 per ounce, Target Silver Price: $26.45 per ounce

My latest Kitco News commentary: Is silver near a top? (7/27/2020, Kitco News) [summary of recent commentaries given at the bottom of the blog]

Baker: Gold in the time of coronavirus (Elko Daily Free Press, 6/4/2020)

An easy-to-understand overview on gold (32 slides, read explanation below each slide): History of gold and which countries have the most

Morning!

Gold is down from its early morning high of $1,895.7 per ounce but should fly above $1,900 next week. The ole Colonel remains bullish for 2020. Comex copper scored a new high earlier this morning at $3.6445 per pound.

Comex February gold is presently trading at $1,889.2 per ounce (8:53 am Eureka Time).

Comex March silver is presently $26.07 per ounce (9:03 am Eureka Time).

Comex March copper is presently $3.6250 per pound (9:03 am Eureka Time)

This is how I explained my gold and silver outlook to the Kitco Weekly Gold Survey:

[Note: my inputs are now "early bird" Thursday morning summaries]

This morning's [12/17] Comex February gold breakout above the $1,900-level is a welcome sign and may signal a reversal in gold's range-bound behavior since (U.S.) Thanksgiving week ($1,880.7, 11/23 range top; $1,767.2, 11/30 bottom). This may seem counterintuitive with global equities surging higher and the U.S. dollar plumbing a new low (DXY= 89.75) on positive vaccine news and additional fiscal stimulus in the pipeline. However, there are good reasons for safe-havens to enjoy a reboot in the coming weeks.

Weaker signals from the U.S. manufacturing sector and spike up in unemployment claims signal that the road to a robust economic recovery will still be rocky in the months ahead. Real interest rates also provide some clues. The U.S. 5-year real rate has dropped a full 31 basis points (bps) more negative in only 1-month (-1.57%); the 10-year is less dramatic but notably slumping 19 bps (-1.06%). Negative interest rates are a bullish environment for a non-interest earning asset like gold.

Finally, the copper-to-gold ratio peaked last week (0.1946, 12/10). This is a fairly dependable leading indicator for 10-year Treasury yield. The ratio and yields have been trending higher - a falling ratio signals lower interest rates ahead, at least until the recovery catches a gear. 10-year Inflation expectations are also on the rise (1.92%, 12/16) which, in combination with yield, supports more negative real rates and possible inflationary pressures in 2021. Gold is considered by many to be an inflation hedge.

These are the strange times of coronavirus.

Stay safe my friends.

Chart for the Week

The stability trajectory of the copper-gold ratio suggests the ratio has peaked for the time being. The two charts below were first created last Friday (12/11) and updated with this Friday's close. They tell the story. Presently the copper-gold ratio is 0.1923 which is less than the high of 12/10 or 0.1946.

Ratio extremum (high or low) typically happen in the upper-right quadrant of the lambda-Map (first graph). A counter-clockwise trajectory turn marks when the peak/trough in copper-gold occurs (usually within several market days). Given recent data, Thursday 12/10 may very well be the peak following 4 market-days after the turn (blue arrow). The second graph shows the copper-gold ratio plotted against time. Interestingly, the ratio low (0.1384) occurred last summer during another period of ratio instability.*

* an unstable condition is defined as a ratio whose 1-month and 3-month volatility both exceed 4%. This level is based on historical records of the copper-gold relationship.