Recently, there has been a strange phenomenon in the market—gold prices hitting a record high, silver closely following, and copper prices soaring wildly. On the surface, it looks like a broad bull market, but this is precisely the most dangerous signal.

What is the normal market operation logic? Rising copper prices reflect a strengthening economy and robust industrial demand; a sharp surge in gold usually indicates investor panic and risk aversion. The two should move inversely, as per decades of market规律.

But now, things are different. The correlation among metal commodities has converged to 1, with industrial metals and precious metals seemingly tied together by a single string. This reflects the complete collapse of the risk parity model and the disconnection between real interest rates and gold prices.

To put it more plainly: this is not normal inflation trading, but outright capital flight. Smart money has already sensed the risk—they are massively selling stocks and bonds—those paper promises—and instead are hoarding physical assets. Essentially, this behavior is a market warning: the system is malfunctioning.

With over twenty years in the industry, I have only experienced three such bizarre "correlation surge"行情:

In 2000, during the last frenzy of the internet bubble, all asset classes surged together, and economists claimed "strong demand." Six months later, the internet collapsed, and a recession followed.

In 2007, on the eve of the global financial crisis, the market also showed a false prosperity, with precious and industrial metals rising in tandem, and financial institutions still promoting "solid fundamentals." We all know what happened next.

In 2019, the repo market was on the brink of collapse, and liquidity shortages pushed up the prices of all safe-haven assets. The market's "correlation convergence" served as an early warning of the subsequent adjustment.

In these three instances, economists' narratives were eerily similar—emphasizing strong demand—yet within six months, a recession was inevitable. The market was trading in the most honest language: fiscal deficits are unmanageable, debt issues are deadlocked, and currency devaluation is an inevitable outcome.

When all asset classes are rising together, be extra cautious.