Copper/Gold Ratio Says Bond Yields Rally Overdone

The price of copper to gold has been a correlation that has followed 10-Year US Treasury bond yields (in trend) fairly closely.

This correlation has been one that I’ve followed to see if bond yields are changing trend, or if the trend has become overdone.

Today, this trend is on our radar as inflation is a major nemesis and the Federal Reserve is raising interest rates very quickly. This has spurred a fast rally in 10-year yields.

Below is a long-term chart highlighting the Copper/Gold ratio versus the 10-year treasury bond yield. As you can see, the two tend to follow each other in trend. The spread between the two is its widest in a couple of decades right now, with the 10-year bond surging higher.

Is it time for the spread to narrow? Seems likely…

IF not, this would suggest some credit quality issues in U.S. Government bond paper and that would be whole other concern. Keep an eye on this!

(Click on image to enlarge)

More By This Author:

Tech Stocks Need To Reverse Under-Performance Trend
Chinese Stock Market Sends Warning As Waterfall Selloff Continues
This ETF Loves Higher Interest Rates, Says Joe Friday

Disclosure: Sign up for Chris's Kimble Charting Solutions' email alerts--click here.

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.