This multi-year chart of copper prices on the futures market is from Finviz.com.
Headlines are most often about stocks and oil. Special sites focus on precious metals, but they tend to be more fringe-y.. Almost never in the popular press does copper get a mention. But copper prices may well tell the tale of the coming trend of the current biflation. Will it tilt back toward more price inflation or away from it?
With oil having reached my first downside target of $90, I now have no clue short-term.
Unlike oil, copper did not go wild in 2008, and as you see, it surged and then crashed in 2006 before the mega-crash in 2008. Thus unlike oil, it is now within its 2006 price range. Short-term there is a bit of a bearish downtrend, but on a multi-year basis, I can’t discern any trend at this juncture.
Long called “Dr. Copper” for its alleged ability to “diagnose” (reflect) the strength of the US/global economy, this metal is not politicized as is oil. (NATO is not assisting in getting rid of Mr. Qadaffi because he controls 2% of the world’s copper market.) Thus it more fairly than oil represents supply and demand in diverse parts of the world’s economy.
As you see, copper found intense upside resistance for several years at $4/lb. It then broke through to all-time highs in the inflationary sequelae to the 2008-9 bust. If $4 can hold, I think that would be big for the commodities bulls. If it falls back well into the prior trading range, that will embolden the deflationists.
It’s worth watching this one.