The Stagflation Signal Everyone's Missing
| | | Hey there, Blake here. | Copper versus gold just hit levels we haven't seen since the worst of the 2008 financial crisis. While everyone's celebrating "good" economic data this week, the charts are screaming a different story - we're approaching stagflation territory. | The copper-to-gold ratio sits at 0.13 - near the lowest levels in decades. During the 2020 lockdowns, this ratio spiked to 2.2 as stimulus drove copper demand. | Now it's collapsing toward 2008 crisis levels. | | | | Copper measures real demand. Gold measures inflation fear. When copper trades at just 13 cents for every dollar of gold, you have inflation without growth. | THE MATH BEHIND THE PANIC | Here's the calculation: if the dollar loses 1% purchasing power (coming in September based on my analysis), equities historically move 2.5% higher from currency debasement alone. Your purchasing power evaporates while asset prices inflate. | Jerome Powell's Jackson Hole nervousness about labor markets tells me next Friday's jobs data will be ugly. Bad jobs + stagflation signals = Fed forced to cut rates into inflation. | THE TRADES THAT MAKE SENSE | Gold: Targeting $3,730. If gold breaks $3,533, expect it to duplicate recent patterns for a $200 move. | Metals Mining: Buy miners, not gold directly. Their margins expand with gold prices and they pay dividends. | Consumer Staples: Kroger pays 3% just to own it. In stagflation, people still need groceries. | Bonds: Rate cuts mean bond prices rise. IEF is my play. | THE UNCOMFORTABLE REALITY | Consumer sentiment confirms what the copper-gold ratio shows: people feel inflation reality despite "good" headlines. Energy deflation since 2022 has masked the underlying stagflation picture. | Either copper spikes dramatically (showing real demand growth), or we're heading deeper into stagflation than most realize. | The Fed meeting in two weeks will confirm what charts already scream. Position accordingly. | If you want to trade alongside me next week, you can find me in the TheoTrade Main Chatroom. | Have a great Labor Day! | Blake Young | | | | Stagflation Plays | Stagflation Plays: | Newmont (NEM): Mining play on gold strength, dividend paying Metals & Mining sector: 8-10% opportunity, margins expanding with gold Consumer Staples: Costco $940 puts (2.5% premium), Walmart defensive rotation Bonds (IEF): Rate cut positioning
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| | | Reader Question of the Week | Q: Does the dollar index have to go up with gold weakness? | A: No - dollar index is dollar vs other currencies, not vs gold. The dollar could be weakest of all currencies so the index doesn't move, but gold could fade. Generally 85-90% correlated but not always. Global disinflation can bring gold down without the dollar index rising. |
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| | | Don't Miss It… | Don Kaufman just spotted the setup that killed portfolios in September 2022. He's seeing the same warning signs flashing now - and this time, we only get 3 trading days to position before the damage hits. | His video drops at market close today. He's calling out the specific levels that break everything, plus the 3 trades he's making while everyone else is still celebrating last week's "recovery." | The shortened Labor Day week isn't random timing - it's when institutions dump positions they don't want to babysit. Don's positioning for exactly that scenario. | Watch here before Tuesday's open. |
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