Copper Contango Keeps Steepening

There doesn't seem to come an end to it. The copper contango keeps steepening to 2.5% for 1 year futures, while the copper price remains steady.

If all goes as planned, we will see a huge copper and stock market rally in the future. Probably helped by good Chinese numbers. China's trade surplus surged 48% in 2012, its exports jumped 14% and its non-manufacturing PMI rises to a new high of 56.1. China has even so much money left over to double its gold purchases in November 2012.

If China does well, commodities will do well. The only asset that will underperform is U.S. bonds. Just recently, China's sovereign wealth fund had even opted to back off in buying U.S. treasuries and putting more into stocks and real assets.

Chart 1: Copper Contango Vs. Price

I would recommend people to continue buying gold, or rather: platinum. I predicted that platinum would surge against gold and it has come to fruition. Platinum has now reached parity with gold and I forecast that we will continue to go higher in platinum against gold until the historic platinum to gold ratio of 1.2 has been reached. The main catalyst is a 7% global platinum production cut recently announced by Anglo American Platinum.

Chart 2: Platinum to Gold Ratio