Thursday , 23 May 2024

What Says Dr. Copper About Our Economy?

…It seems that many economic indicators no longer make sense…The reason Copper-USFSfor the mixed picture is the severity of the last recession. It’s no secret that the latest recovery has been very long but very weak. With the renewed talk of rate hikes in December, I decided to consult the only metal with a Ph.D. in Economics – Dr. Copper, as traders like to call the metal.

The comments above and below are excerpts from an article by Ivan Martchev ( which may have been enhanced – edited ([ ]) and abridged (…) – by (Your Key to Making Money!)  to provide you with a faster & easier read.  Register to receive our bi-weekly Market Intelligence Report newsletter (see sample here , sign up in top right hand corner.)

Since a peak in 2011, the price of Dr. Copper is weak and getting weaker.

The previous price spikes in the 1970s, 1980s, and 1990s corresponded well with an accelerating and decelerating U.S. economy, while the move from $0.60/lb to $4.50/lb (2001 to 2011) bears no reference to the U.S. economy. China was the main driver of the copper price then, as China’s economy grew from $1 trillion to $11 trillion…

I think the price of copper may get a bit weaker in the next two years without necessarily signifying problems in the U.S. [given that] the present weak copper price is basically a factor of the weakening of the Chinese economy [which will be that much weaker] by then, in my view.

The price of copper says that the global economy is much weaker…[and] may not be able to handle a U.S. dollar rally caused by multiple Fed rate hikes. I think the dollar is going to rally anyway, but rate hikes would make the rally accelerate.

I know the global economy and the exchange value of the dollar are not at the top of the agenda at FOMC meetings, but

I think that if they hike in December 2016 they run the risk of reversing course in late 2017 due to the situation in the global economy, particularly China.

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