In a recent video, Jesse Columbo, an independent precious metals analyst, highlighted the often-overlooked relationship between silver and copper. With a background in finance and a passion for precious metals, Columbo has gained a reputation for his insightful analysis and accurate predictions.
Columbo’s claim is that silver’s price movements are not solely correlated with gold, as many investors believe. Instead, there is a strong historical connection between silver and copper, and their prices often move in tandem. This relationship is so pronounced that it warrants close attention from investors.
A Strong Historical Connection
Historical data reveals a compelling correlation between silver and copper prices. Over the past five years, the correlation coefficient between the two metals has been a robust 725 out of 1, and even higher, at 878, over the past year. This suggests that movements in one metal often mirror those in the other.
Shared Supply and Demand Factors
The close relationship between silver and copper can be attributed to several factors. From a supply standpoint, silver is frequently a byproduct of copper mining, meaning that production of one often influences the other. On the demand side, both metals have significant industrial applications, driving substantial demand from various sectors.
Industrial Demand as a Key Driver
While silver is often associated with gold, its demand profile is distinct. A majority of silver demand comes from industrial uses, such as electronics, solar panels, and automotive components. This industrial focus aligns closely with the growing demand for copper, which is essential in various technological applications.
Economic Sensitivity
Both copper and silver are more sensitive to economic cycles than gold. During economic downturns, demand for these metals tends to decline due to reduced industrial activity. Conversely, during economic expansions, demand for copper and silver rises as industries ramp up production.
Trading Algorithms and Price Amplification
Trading algorithms can further amplify the price relationship between silver and copper. These algorithms often predict movements in one metal based on the price of the other, creating a self-fulfilling prophecy. For example, if copper prices rise, algorithms may buy silver, causing its price to follow suit.
A Hybrid of Gold and Copper
Columbo’s analysis suggests that silver’s price movements are essentially a hybrid of gold and copper. By averaging the prices of gold and copper, adjusted for their relative values, he found a striking resemblance to silver’s price chart. This indicates that understanding both gold and copper is crucial for accurately predicting silver’s price.
Copper’s Bullish Outlook
Copper’s recent rebound and positive outlook are also bullish for silver. As the world transitions towards cleaner energy technologies, demand for copper is expected to surge. This growing demand, coupled with supply constraints, could lead to significant price increases for copper.
Silver’s Potential
With copper’s strong fundamentals and technical indicators pointing upwards, silver investors should be optimistic about the metal’s future. While it has been consolidating below a key resistance level, a breakout could signal the start of a new uptrend.
Conclusion
The often-overlooked relationship between silver and copper is a critical factor for investors to consider. By closely monitoring copper’s price movements, investors can gain a better understanding of silver’s potential and make more informed investment decisions. As both metals are poised for growth due to industrial demand and economic factors, the future looks promising for those who are paying attention.
About Jesse Colombo
Jesse Colombo, the author of The Bubble Bubble newsletter, is a respected figure in the precious metals community. With his expertise as an analyst, investor, and writer, he has gained a large following online.
Columbo’s foresight was evident in 2008 when he accurately predicted the Global Financial Crisis. This recognition from the London Times solidified his reputation as a visionary in the field.
His dedication to free markets and sound money aligns with the values of many precious metals investors. Through his work, Colombo provides valuable insights and analysis, empowering individuals to make informed investment decisions.
“Best Overall” by Money Magazine, Award-Winning for 6 Years, Thousands of 5-Star Rankings
Expand Details
Renowned for its exceptional customer service and commitment to transparency, Augusta Precious Metals has garnered numerous accolades, including “Best Overall” from Money magazine and “Most Transparent” from Investopedia. The company’s dedication to educating and supporting its clients has earned it top ratings from organizations such as A+ from BBB and AAA from BCA.
Industry leader with over $2 Billion in gold and silver. Top rated precious metals company with buy back guarantee
Expand Details
From precious metals iras to direct purchases of gold and silver, goldco have helped thousands of americans place over $2 billion in gold and silver. Top-rated precious metals company rated A+ by the better business bureau rated triple a by business consumer alliance earned over 6,000+ 5-star customer ratings Money.Com 2024 best customer service 2024 inc. 5000 regionals: pacific ranked #17 2024 gold stevie award, fastest growing company inc. 5000 award recipient, 8+ years
American Hartford Gold, ranked #1 Gold Company on Inc. 5000, boasts thousands of A+ BBB ratings and 5-star reviews, endorsed by Bill O’Reilly and Rick Harrison..
Expand Details
With over $2 billion in precious metals sold, American Hartford Gold helps individuals and families diversify and protect their wealth. Their expert team provides investors with the latest market insights and a historical perspective, ensuring informed decisions. Trusted by public figures and praised for exceptional customer service, the company offers competitive pricing on top-tier gold and silver coins, backed by a 100% customer satisfaction guarantee