GM. This is Milk Road Macro, we scour the most in-depth macro indicators that have an impact on your bags.

Here’s what we got for you today:

• ✍️ This cycle indicator is flashing a bullish signal

• 🎙️ Mark Yusko Reveals How to Build a Bulletproof Crypto Investment Portfolio

• 🍪 A crucial stablecoin bill will be voted on this week

THIS CYCLE INDICATOR IS FLASHING A BULLISH SIGNAL 🚦 

Markets are all about cycles.

The same cycles repeating over and over again.

And one big cycle indicator might be flashing a signal right now.

It’s the copper/gold ratio.

The copper/gold ratio is important because it’s a signpost that tells us where we are in the economic cycle.

It has big implications for risk assets like stocks and Bitcoin.

And it might be making a big cycle turn.

So what is the copper/gold ratio?

What’s going on currently?

And what might this mean for risk assets?

Let’s take a look…

What is the copper/gold ratio?

The copper/gold ratio measures the price of copper relative to the price of gold.

When the ratio is rising, copper is outperforming gold.

And when the ratio is falling, gold is outperforming copper.

For more than three decades, the copper/gold ratio has moved in long-term cycles of roughly three to six years.

We can separate each individual cycle into two phases - a rising phase (green) and a falling phase (red).

So what does the copper/gold ratio mean for risk assets?

The strongest periods of performance for US stock indices have historically coincided with rising phases in the copper/gold ratio.

Whereas equity bear markets - and extended flat, choppy periods - almost always coincide with copper/gold ratio falling phases (although a falling phase is not always bad news for US stocks).

All of Bitcoin’s “mania bursts” (2012/2013, 2016/2017, 2020/2021) have coincided with rising phases in the copper/gold ratio.

While all of Bitcoin’s bear markets have coincided with falling phases in the copper/gold ratio.

Remarkably, the end of every Bitcoin “mania burst” has coincided with the top in the copper/gold ratio - within a matter of days.

But what does the copper/gold ratio actually represent?

While copper and gold are both metals - their respective prices move for very different reasons.

Gold is largely a monetary metal.

The gold price will generally rise due to a demand for safe haven assets, rising geopolitical tensions and economic uncertainty.

Whereas copper is largely an industrial metal.

The copper price will generally rise due to industrial demand from manufacturing, construction and infrastructure.

So the copper/gold ratio rising could be a sign of lower demand for safe haven assets, lower geopolitical tensions, less economic uncertainty, a strengthening global economy and improving global manufacturing.

Whereas if the copper/gold ratio is falling, it could be a sign of higher demand for safe haven assets, higher geopolitical tensions, more economic uncertainty, a weakening global economy and deteriorating global manufacturing.

Is the copper/gold ratio turning?

The copper/gold ratio looks like it might potentially be turning up.

It’s still early days, but the most recent low was printed on April 11.

And since then, copper has been outperforming gold, particularly in the past two weeks.

So we might be witnessing the start of a new rising phase in the copper/gold ratio, after the last rising phase ended in late 2021.

Since 2009, there have been four rising phases, and the average length of a rising phase is 643 days.

So, if we assume that 

1. The copper/gold ratio did bottom on April 11

2. “This time is not different” 

Then, a new rising phase of an average length could be expected to peak roughly around Q4 2026 to Q1 2027 (although there is a big variance in the length of previous rising phases).

But is the copper/gold cycle ratio broken?

You might have noticed that the copper/gold ratio has been falling for more than 3.5 years.

The first part of this period coincided with the risk asset bear market in 2022.

But since then, stocks and Bitcoin have been rallying, even though the copper/gold ratio has continued falling.

There are many potential reasons as to why this latest falling phase has lasted so long.

But there’s one big reason…

Let’s talk about China

China is an incredibly important part of the global economy.

China is the “manufacturing engine of the world”.

It’s integral to setting the tempo of the global economy.

China is also the country that has the biggest impact on the copper/gold ratio.

This is because the relative strength of the Chinese economy fuels both sides of the ratio.

China is by far the biggest consumer of copper in the world.

So when the Chinese economy is strong, demand for copper increases and the copper price will often rise.

On the other hand, gold holds significant cultural and economic importance in China - it is an incredibly popular investing vehicle.

Particularly when the Chinese economy is weakening, Chinese investors will often turn to gold, increasing demand and putting upward pressure on the gold price.

Below, I have plotted the Chinese Government 10-year bond yield (CN10Y) alongside the copper/gold ratio.

There’s a clear correlation between the two.

CN10Y is a very rough proxy for the relative strength of the Chinese economy.

• CN10Y rising = Chinese economy strengthening

• CN10Y falling = Chinese economy weakening

This may be one plausible reason as to why the copper/gold ratio has been falling for such an extended period of time.

CN10Y was basically sliding into the abyss through 2024, as the Chinese economy was weakening.

But then it abruptly stopped falling in early 2025 - and started to stabilize.

Why is this?

It hit a wall of money.

In December 2024 the People’s Bank of China (PBoC) - the central bank of China - made a rare move in officially changing its monetary policy stance from "prudent" to "moderately loose".

Since then, the PBoC has injected roughly 4.5 trillion RMB ($630B) into Chinese money markets.

The chart below shows the total amount of liquidity provided through the PBoC's three main policy tools.

China looks like it’s getting serious about providing more monetary stimulus and supporting its economy.

And this can only be a good thing for the copper/gold ratio, the global economy as a whole, and potentially risk assets more broadly.

So keep an eye on the long-term cycle of the copper/gold ratio - it might just be starting to turn.

That’s it for this edition - catch you for the next one.

THE 4-YEAR $BTC CYCLE ISN’T DEAD 🎙️ 

We had a banging podcast episode last week where we were joined by Mark Yusko, one of the best crypto and macro specialists in the space.

He joined the The Milk Road Show to chat about:

• Should you invest in GameStop?

• Other Bitcoin treasury companies

• Why inflation is a hidden tax

Check it out 👇️ 

YouTube | Spotify | Apple Podcasts

BITE-SIZED COOKIES FOR THE ROAD 🍪

A crucial stablecoin bill will be voted on this week. The GENIUS act will be the main focus in the US Senate on Wednesday.

US petrochemical producers have found themselves on the front line of global trade wars. While China weaponizes its monopoly on rare earth metals, it is also heavily reliant on US petrochemicals.

TSMC's May sales jumped 39% due to strong AI demand. The Taiwan company experienced high demand as firms increased chip inventory amid trade uncertainties.

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