Gold turns sharply higher on possible last minute stimulus package, new Biden era in Washington. Is copper leading a bull run in commodities?

(USAGOLD – 12/15/2020) – Gold turned sharply to the upside in early trading on indications that Washington might come to terms on a last-minute stimulus package, expectations of a relatively benign Fed meeting kicking off today, and the electoral college putting its seal of approval on the 2020 election ushering in the Biden era. The yellow metal is up $25 at $1855. Silver is up 62¢ at $24.54. Copper continued its uptrend today (+.6%) and is now trading at levels last seen in 2013. Some see copper as leading a new bull market in commodities. If so, it might portend a run-up in the inflation rate.

“The copper bull,” writes TheChartStores Ron Griess in a note to Gold Newsletter last week, “by all indications, is already beginning to run. And in fact, it’s already affecting much of the rest of the commodity sector, as shown in our chart of the Equal Weighted Continuous Commodity Index. The stochastic for this index is indicating the same surge of upward momentum as that of copper. You won’t find this discussed much elsewhere, at least not yet, but a full-fledged, broad commodity bull market seems to be beginning.”

“This,” says Gold Newsletter’s Brien Lundin, “is supportive of the view that the recent  [gold] correction is, if not already behind us, then will be very soon. … Broadly speaking, a similar consolidation this time would allow for gold to retest or violate recent lows and still set up for a consequential rally.”

Chart[s] of the Day

Gold
(20-year, in percent)

line charat showing gold performance since 2000 as a percent

Dow Jones Industrial Average
(20-year in percent)

line chart showing stocks performance in per cent from 2000

Charts courtesy of TradingEconomics.com • • • Click to enlarge

Chart note: The twenty-year chart encompasses gold’s secular bull market. Over the period, gold is up 573%, and stocks are up 181%. We rest the bullish case for gold on the understanding that none of the economic and financial system problems that created a positive price environment for gold over the last nearly fifty years have been removed from consideration. In fact, a case could be made that they have only intensified over the past year – and dangerously so.

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