Copper-to-gold ratio signals absent global reflation
The guest argued that the copper-to-gold ratio indicates a lack of global economic reflation, contradicting the narrative of an AI-driven industrial boom.
The argument
Despite relatively high copper prices driven by supply constraints, the copper-to-gold ratio remains near historic lows comparable to past economic downturns. The speaker suggested this reflects structural weakness in global industrial demand, particularly in China, rather than a new commodity supercycle.
The thesis, stress-tested
✓ What validates it
- ✓Copper-to-gold ratio remaining depressed at historic lows
- ✓Further deterioration in Chinese industrial GDP data
▸ Risks discussed
- ▸Supply disruptions in copper mines keeping copper prices disconnected from economic reality
- ▸A surprise economic turnaround in China
Hear it yourself
"So if you're thinking, as far as gold prices, if you still believe central bank and policy rates play a role in gold, the tips market says there's not there's not any inflation risk that's gonna keep central banks hiking one after another after another after another. They might get one or two because they need some time to realize that they're wrong about the inflation potential, but that's all you're really gonna get out of central banks. Again, the tips market, nothing is ever 100%. But as far as, you know, here's one of the deepest markets in the world, most sophisticated. And by the way, this is historically validated."
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