Image 1: Aluminum price in terms of gold and copper price

Image 1: Aluminum price in terms of gold and copper price
Image 1: Aluminum price in terms of gold and copper price
Source: Bloomberg

I have two charts up on my computer that I routinely go through. I learned early in my career that the best traders, even outside of the commodity complex, like to look at these industrial metals (ALE1 and HG1) priced in terms of gold (GC1) in order to take the FX effects out of the price. Thus, a trader might be able to ascertain a solid view of the commodities market’s sense for supply and demand. Since May, as both of these measures have shown extreme weakness, it has led to a number of commentators wondering if the global economy is entering into a period of meaningful economic slowdown.


Image 2: Aluminum priced in gold, copper priced in gold, U.S. ISM Index and China’s Li Keqiang Index

Image 2: Aluminum priced in gold, copper priced in gold, U.S. ISM Index and China’s Li Keqiang Index
Source: Bloomberg

Image 3: Generic front month Aluminum and Copper futures contracts Ichimoku charts


Image 4: CVOL for Metals markets


Image 5: CVOL and skew for aluminum and copper


Image 6: Commitment of Traders for Aluminum and Copper futures


Image 7: Implied volatility surface for Aluminum and Copper options


Image 8: CVOL for aluminum and copper


Image 9: Expected return for buying two September Aluminum 2275 calls


Image 10: Expected return for selling one September Copper 4.19 call