Iron Ore hits 7-year highs, Why should we care?

December 19, 2020

For months now, we've been pointing to the fact that metals are doing great. It's just that Gold isn't one of them.

Base metals are where the smart money has been flowing. Copper has been hitting the highest levels since 2013 and absolutely embarrassing the performance of its precious metals counterpart, Gold which has not been so golden.

Copper outperforming Gold is consistent with higher Interest Rates, and we've been getting those too.

More specific to Base Metals on an absolute basis, the positive correlation with Emerging Market Stocks is off the charts. Here is Iron Ore making new 7-year highs overlaid with the Emerging Markets Index so you can see how closely they trade together:

As a friendly reminder, Emerging Markets have made zero progress over the past 13 years. They tell me stocks are in "a bubble", but I see that one of the most important stock market indexes on earth hasn't even broken out yet.

This party hasn't even gotten started. It's just getting warmed up.