Copper’s Not-So-Hidden Signal for Gold…

The entire August-September 2024 rally was a verification of the breakdown below the rising, long-term support/resistance line that started at the 2020 bottom. After all, this line is where copper reversed.

What is striking about copper’s current performance is that quite sharp (from the long-term point of view) corrections after the first part of the move lower are to be expected and therefore what we saw perfectly fits the broader bearish pattern.

Please consider the situations that I marked with yellow arrows. Each final top in the past 20 years was followed by this kind of rally.

What’s particularly interesting from our point of view, is that those cases were generally great shorting opportunities in case of mining stocks, silver, and gold – I marked those cases with yellow arrows in the lower part of the chart.

Is getting excited about copper’s recent “strength” therefore justified? Yes, but only as long you are positioned to benefit from the likely decline. Some long-term opportunities’ (in silver) continue to look favorable, though.