Metrics Ventures Market Outlook: Q3–Q4 Focus on Copper, Electricity, and Gold

1/ Originally titled for July, but given the extraordinary significance of Warsh’s July remarks, we have appropriately extended the scope of this monthly analysis. As expected, the title remains unchanged; as of the date of this report, Warsh’s incompetence has already been rapidly priced in by the bond market through sharply widening spreads. The dollar’s issues are no longer something a Fed chair can alter or resolve—the process will inevitably involve one disturbance after another.

2. From a market perspective, we observe that the U.S. stock and bond markets continue to diverge in their assessment of credit risk: the stock market, after selectively unwinding some leverage, has reverted to its previous stance of blind confidence, while the bond and foreign exchange markets persist in delivering unyielding signals of distrust. The early bottoming out of gold and silver has signaled a clearer consensus among central banks: the era of “race to the bottom” among Western currencies no longer tolerates verbal disruptions—the prevailing trend is unstoppable. At this moment, we are not concerned that further bursting of the U.S. stock market bubble will occur in the short term; instead, our focus is shifting toward how liquidity release via FIMA will evolve next.

3/ Looking ahead, for Q3-Q4, we remain bullish on rigidly constrained resources along the global supply chain, such as copper and electricity, as well as gold, given the ongoing trend of currency devaluation. In the digital asset market, we believe significant outperformance is unlikely until excess liquidity is fully absorbed and the marginal growth of AI is fully priced in.

In terms of market trends, our main view is:

① At present, commodity assets such as gold are still expected to absorb liquidity ahead of Bitcoin; the consolidation over the past few months has been very healthy:

② The bull trend for RMB-denominated assets remains clearly intact; there should be no excessive concern. Taking the core technology sector index, the STAR 50, as an example:

③ Not only has the spot price of copper reached a new high, but the stock indices and currencies of key resource-producing countries have also reached a critical juncture before a directional decision:

Considering the current trends in foreign exchange and bond markets, we believe that commodity stocks, including gold and silver, have likely reached the end of this consolidation phase. Even after a potential rebound, the valuations of certain assets effectively offer a generous call option on metal prices. Against the backdrop of inevitable slowing marginal growth in AI, select base metal assets in the RMB market warrant attention.

From a macro perspective, we place particular emphasis on the recent U.S.-Japan joint currency intervention and the implications of Warsh and Bessent’s interactions for predicting future Fed behavior. In reality, a Fed chair attempting to emulate the Jiajing Emperor at the twilight of an empire would be highly irrational; meanwhile, the Treasury’s direct intervention using tools like FIMA to override the FOMC and serve as the de facto supreme authority represents the most credible action taken thus far. As a friend put it, reducing communication, fabricating data, and glossing over problems allowed the Ming Dynasty to continue its revelry. Given this context, if selecting a strategy with significantly positive EV over a three-year horizon, going long on base metals is also a strong option.