A flurry of seismic activity around the Pacific “Ring of Fire” triggered several earthquakes across multiple continents over the past week but thus far Chile has taken with biggest hit with an 8.2 magnitude quake killing several people and sparking a tsunami. Scientists believe that the worst may be yet to come, saying that the region is overdue for an even bigger quake.
Copper prices jumped on news of the earthquake but quickly retreated when it came out that Chile’s mines (accounting for over 1/3 of global mine supply) would see little interruption. If a quake were to seriously damage the Chilean economy, expect the correlation between copper and the Peso to diverge materially from the pattern we have seen over the past several years.
Chilean Peso (white) – Copper (orange)