Copper-Gold Ratio Market Predictor — Full Breakdown & Transcript

[00:00] I like hot facts, I like statistics, that's why today I like to use numbers to support my observation and that's the reason why I'm going to talk about Dr. Copper.

[00:12] Who is Dr. Copper? Is that a person? No? It refers to the matter copper. But the real aim of this video is to look at one ratio and this one ratio can give us a lot of insight into the economy.

[00:24] Is there going to be a recession in 2024? What will happen to the stock market? First right, we're going to talk about the Copper-Gold Ratio. First, let's talk about the importance of Dr. Copper. The term Dr. Copper was first coined in the early 1900s by economist Paul Samuelson.

[00:41] Samuelson observed that the price of copper often moves in advance of the stock market and other economic indicators. This led him to conclude that copper could be used to predict future economic trends. This is because copper is a very important industrial matter that is used in a lot of

[00:59] variety of industries including construction, manufacturing and transportation. In recent years, copper has become an even more important indicator of economic health due to the growing demand for copper in electric vehicles and renewable energy sector.

[01:12] As the world transitions to a clean energy economy, demand for copper is expected to continue to grow rapidly making it an even valuable indicator of global economic activities. Now you see the linkage between copper and economy. Then what happens if we look at copper

[01:29] and gold together? That's right we look at copper to gold ratio. Now this is because copper is a very important industrial matter used in different industries while gold is seen as a safe haven asset with limited industrial use The Corporate to Gold ratio compares these two assets and provides an insight to the economic activity For example when the copper ratio rises

[01:52] it means that the copper is outperforming gold. This suggests that the economy is growing and the demand for industrial metal is strong. Conversely, when the copper-to-gold ratio falls, it means that the gold is outperforming copper.

[02:05] This suggests that the economy is slowing down and that investors are seeking safe haven assets. Then, what is the copper-to-gold ratio telling us today, especially in the light of high interest rates now?

[02:17] Can it predict whether the economy is still growing or can it tell us whether the stock market is still bullish? I will take a look at copper-to-gold ratio chart and compare that to S&P 500.

[02:30] Not only that, I will be drawing one line and you'll be very interested to look at the price interaction of the copper to gold ratio to this one particular line and you'll find it amazing. You guys can tell us a lot of insights.

[02:42] How do you get the copper versus gold ratio in TradingView? So first, there's a simple search and then key in copper, backslash, which is divide, key in gold and this should get you the copper versus gold ratio.

[02:54] At the top here, you see the copper versus gold ratio and the orange line will be the price of copper and the blue line shows the price of S&P 500. I'd like you to pay attention to the green line that I've drawn in here, which is around this value, 0.00186.

[03:08] Now, how do I get these numbers? It's because I've been using the copper versus gold ratio for many years already. I realized that the market tends to give very good turning point when price hovers around this ratio here.

[03:21] Now, take a look into 2009. Now this is 2009 somewhere around here when the price of copper versus gold ratio moves above from the below and it moves above this green line here it shows you the market bottom

[03:37] So this was the bottom and from there the S&P 500 actually moves up. The second time that it tested this line was around 2011. Again it bounds off this line and it shows you the market bottom for S&P 500.

[03:51] Next, we move on to around 2016. And in 2016, there was a period of time where this ratio spent its time below that green line that I've drawn. And we saw that the market was actually a little bit sloppish.

[04:04] And the market started to bottom out and started its ascent towards 2018 when price again closed above this green line there. So, let's jump a little bit more to look at what happened in 2020. Now, 2020, there was an attempt for price to move above the green line but eventually it settled below.

[04:21] And what happened next? We saw that the market dropped sharply because of COVID-19. Now, the market started to rebound only when price moved above this green line here. We saw that that happened during November 2020.

[04:36] And from there, when the copper versus gold ratio moved above the green line, we saw the S&P 500 actually moved up quite nicely. Going into 2022, that was during the July 2022, S&P 500 corrected.

[04:50] but we saw that copper versus gold ratio bounces off this green line. 2023 was actually a good year for the stock market. Now for example, during the May 2023, the ratio again bounced off this key level here

[05:06] and that where overall the S 500 moves up because of the tech stocks Now today the S 500 corrected about 10 plus percent and right now we are seeing that this ratio is bouncing off the green line So let take a look at the zooming view here

[05:24] We saw for example what happened in 22, 23 and even right now which is October, November 23 period this copper to gold ratio is again bouncing off the green line as a support and every time it

[05:39] bounces off the green line, the S&P 500 actually moves up quite nicely. And this probably explains why there was recently a bounce or rebound in S&P 500. Market went up very nicely. But I think that

[05:53] by tracking into the copper to gold ratio, it tells us the sentiment of the market participants, right? For example, if the market is willing to buy in the copper, it shows a certain level of

[06:05] or the market is no longer buying strongly into gold. It shows that they are starting to go into a bit of a risk-on mode. I hope that the copper-to-go ratio is useful for you to get insight into the extra movement of the economy,

[06:22] at least to the sentiment of what is happening right now. I did also another video that talks about an indicator that predicts almost 100% to whether there is going to be a market crash. you might want to watch this video as well and appreciate if you can just give a like to this

[06:38] video so that more people get to know about the use of copper to gold ratio and i'll see you in my next video