Markets & Metals Navigator: Inflation + Bitcoin + Copper

Inflation Indicators Flashing

Over the last year Capital 10X has repeatedly identified inflation as one of the biggest risks investors need to protect themselves against, given the historic levels of central bank money printing as a result of COVID-19.

To put the magnitude of money printing in perspective: 37% of all US dollars ever printed were printed in 2020.

Plotting the CRB Index (a basket of 19 different commodities) vs. consumer price index (consumer inflation measure) it can bee seen that the CRB Index has spiked ahead of CPI, up 60% year-on-year.  This level of year-on-year CRB index appreciation is typically associated with CPI of 4-5% y/y.

Inflation alarm bells are beginning to sound off everywhere, the 10-year US treasury yield has climbed to the highest in nearly a year – at x%.  A surging copper-gold ratio also points to economic recovery and inflationary tailwinds.

Copper – Poised to Break All Time Highs

Sunday night LME copper futures rallied above $9,000 a ton for the first time since 2011.  Goldman Sachs reiterated their bullish view last week, stating the market is facing the largest deficit in a decade this year with a high risk of scarcity over the coming months.  Goldman analyst Nicholas Snowdon published the following:

“The very low starting point for inventories at the beginning of this year has been further exacerbated by a counter seasonal stock draw so far in Q1 on a scale only seen once before in recent history (in 2004). These trends point towards a high risk of scarcity conditions over the coming months. In this context, the fundamental outlook for copper remains extremely bullish with no evidence that current price levels are yet stimulating softening effects to reverse both spot and forward fundamental tightening trends.”

This coming week Capital 10X will be analyzing the entire copper investment universe, highlighting value opportunities with real upside.

Bitcoin Gains Serious Altitude vs. Gold & Silver

This last week we witnessed Bitcoin passing many milestones as its parabolic assent continued. When Bitcoin reached the $55,000 mark it had also crossed the $1 trillion market cap threshold – this would put it at nearly 68% of the value of total silver market.

Year-to-date Bitcoin is clearly wining the ‘store of value’ race vs. gold and silver. The Grayscale Bitcoin Trust (NASD:GTBC) is up 77% YTD, the iShares Silver Trust (NYSE:SLV) up 3% and SPDR Gold ETF (NYSE:GLD) is down -6%.

Last week in North America the first Bitcoin ETF was launched in Canada, the Purpose Bitcoin ETF (TSX:BTCC), collecting assets of $421 million in the first two trading days.

 

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The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

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Capital 10X gets down to the real money business, actionable financial insights for traders and investors. We analyze company earnings, interview management teams and help teach the fundamentals of financial analysis and options trading. Our mission is to hunt for genuine 10 baggers.
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