That’s the intermarket theory and order I’m familiar with for commodities.
Jason and the guys at Gold Rush do a great job of covering intermarket relationships and what they all mean.
They’ve been all over these commodity trends all year. Some have been great, like gold. Others are messy, like copper. And some downright bad, like crude. It’s been a mixed bag to say the least.
But today, all the buzz is about silver. It’s having its best day of the year as it rips higher out of a bull flag.
Our volatility squeeze indicator suggests a big move is brewing, and there is plenty of runway considering the pattern hasn’t even broken out yet. 35.25 is the level.
I think a major resolution is underway for silver and I'm anticipating a gold-like up-leg to follow. Who knows how high it can go, but there is a lot of catching up to do.
And if we think back to that intermarket routine where gold leads and copper goes next…
Well, silver- being a quasi precious metal with plenty of industrial uses, should logically fall right in between gold and copper.
So, for commodities bulls, I’d say everything is coming together quite nicely.
Meanwhile, copper is getting antsy with a couple of false starts and short-term volatility spikes recently. There’s a coil that resembles the one in silver, and it could resolve higher any day now.
Let’s explore this intermarket exercise and assume that these things both happen. And to be clear, while they haven’t yet, it’s where things appear to be headed.
So imagine that copper and silver break out and look a lot more like gold in the future.
What might we expect crude oil to do in this kind of environment?
Do you think crude is breaking down from a massive top while these things are happening?
Participation is expanding for commodities but crude is resolving lower?
No way. It’s not the bet I’m making.
Today, all these markets moved together with serious upside momentum. And so did silver. I think we will see more of that in the future.
So if silver goes. Look for copper to go next. And while crude could take its time, don’t expect it to move in the opposite direction.
We sold a double in our SLV calls in the Breakout Multiplier portfolio today. We also have some silver miner calls that are up roughly 3x already. I think our copper plays are next.
