On the heels of the Fed’s decision to keep interest rates unchanged, here is a stunning look at gold, copper and interest rates, with particularly bullish implications for the prices of gold and copper.
Smart Money’s Bet On ‘Gundlach Ratio’
December 12 (King World News) – Jason Goepfert at SentimenTrader: “Occasionally, markets attach outsized interest on a money manager that’s had a good streak. It’s usually well- deserved, but whether it can continue is hit-or-miss. The current bond guru is Jeffrey Gundlach, and as Marketwatch noted, he’s placing a lot of weight on one particular indicator to help forecast the future path of interest rates.
The ratio of copper to gold prices does have a good record at tracking 10-year note yields, especially in recent years. And that’s interesting now, because “smart money” hedgers have a large, divergent bet on the two metals. As a percentage of total open interest, hedgers are much more positive on copper than they are on gold. And based on the past 20 years or so, that means interest rates are likely to rise as bond prices fall.
Copper/Gold Sentiment Suggest Higher Interest Rates
Hedgers are currently holding a net long position in copper that amounts to 17% of its open interest. They’re holding a net short position in gold that’s 46% of open interest. So, there’s more than a 60% difference in their position favoring copper (+17% minus -46%)…
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We can see above that when the net difference is +60% or more, the 10-year yield tends to rise, especially compared to other times. Looking at 10-year Treasury futures prices instead of yield, we see the opposite.
Commercial Bets On Copper/Gold Suggest 10-Year Treasuries Will Tumble, Sending Interest Rates Higher
For other assets, it has preceded mostly positive returns for stocks, lower prices for the U.S. dollar, and a higher level in the ratio of copper to gold.
Expect Gold & Copper To See Massive Price Gains
King World News note: Looking at the table above, one year later the prices for gold and copper were significantly higher. In the case of gold, the average one year gain was a massive 24.4%. For copper it was even higher averaging a 26% gain over the next 12 months.
This is another example of why Jason Goepfert is the best in the world at what he does — providing actionable market data. To subscribe to the internationally acclaimed work at SentimenTrader CLICK HERE.
Celente’s Dire 2020 Prediction
READ THIS NEXT! Gerald Celente Just Issued This Dire Prediction For 2020 CLICK HERE TO READ.
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