DoubleLine Capital CEO and Chief Investment Officer Jeffrey Gundlach predicts bond yields will rise and lead to market volatility.

“One of the things that I follow to give a really good short-term cyclical indication of the yield of the 10-year Treasury is the ratio of copper to gold,” Gundlach said Tuesday on CNBC’s “Halftime Report.”

The bond manager cited how on Tuesday the copper-to-gold ratio hit the high of the year and for the previous 12 months.

“When the copper-gold ratio is rising it’s incredibly suggestive that something is going on that might be a little inflationary,” he said. “It suggests to me yields are going to break out to the upside. … The leg up in yields will be a catalyst of volatility in the market.”

Copper futures relative to Gold futures, 1 year

Source: FactSet

As a result, Gundlach believes it may be wise to lower exposure to assets that are up dramatically during the bull market.

“I think you should be de-risking systematically,” Gundlach said. “Even if you it takes six to nine months for the markets to head down you’re not giving up very much.”

DoubleLine has assets under management of more than $100 billion, according to its website.

Gundlach is betting that as yields jump, it will cause volatility—as measured by the CBOE Volatility Index—to double. The money manager is currently long put options on the S&P 500 that will increase in value if the market pulls back, something Gundlach believes it will do, to the tune of 3 percent.

Investors like Gundlach watch the ratio because copper is a measure of inflation. So if it is increasing in value versus an inflation hedge like gold, then bond prices should be lower and yields higher.

Copper/gold ratio (yellow) vs. 10-year Treasury yield, 1 year (green)

Source: FactSet

Source: Investment Cnbc
Bond King Gundlach says an obscure chart tells him yields will shoot higher and stocks will fall