The price of copper has been rising for some time now, while the price of silver, an important industrial metal now is languishing at the bottom of its recent trading range. Would there be any merit in examining a long-term historical chart of the ratio of copper to silver?

Eoin Treacy's view

Thank you for this question which may be of interest to the collective. The outlook for both copper and silver are increasingly intertwined with that of renewable energy. Copper is required in motors, electric recharging infrastructure and wind turbines. Silver is the best-known reflective material. It’s a major component of solar panels, although there are significant efforts underway to try to substitute reliance on the metal.

However, the silver/copper ratio is back at an interesting level as it tests the lower side of a decade-long range.
In absolute terms, silver is at the lower side of a first step above its base. A sustained move below $20 would be required to question that view.

Copper continues to steady from the $4 area. The big question for copper is how much of a loopback will it experience from the potential for Chinese growth to slow down. In extremis, copper is likely to fall faster than silver and the latter may increase in the event of risk-off demand increasing.