Copper, Not Crypto
We should all be paying more attention to Copper prices. It is the often ignored in favor of its shinier cousin Gold, but may offer more clues about inflation and the decade ahead.
We should all be paying more attention to Copper prices. It is the often ignored in favor of its shinier cousin Gold, but may offer more clues about inflation and the decade ahead. A thread on the red metal.
Copper is the 3rd most used metal in the world after iron and aluminum. It is typically correlated with economic health. Unlike almost every other commodity, Copper is down 10% YTD to $4.01/pound and 20% since its all-time-high in March of $5.04/pound. Is this good news?
40-50% of Copper is purchased by China, per Institutional Investor.
Are falling prices an indication of a weakening Chinese economy? Well, Chinese home prices fell for a second straight month.
Other data from China has come in mixed. Industrial production, fixed asset inventory, and exports are up; Retail sales are down.
Supply could be a factor here as well, with large mining projects coming online later this year in Peru, Serbia, and Chile.
in 2017, Bloomberg released an analysis that showed Copper is a better hedge against inflation than Gold.
It's possible Copper is a leading indicator for Crude oil prices, which have followed Copper's recent decline to drop 13% after testing March highs last week. Maybe the start of a commodity downturn?
Looking ahead later in the decade, this could just be a short-term respite. Turns out Copper is needed in rapidly growing industries, like electric batteries and semiconductor wiring.
Within a few years, there may be a major supply gap and prices could head much higher.
Any opinions or forecasts contained herein reflect the personal and subjective judgments and assumptions of the author only. There can be no assurance that developments will transpire as forecasted and actual results will be different. The accuracy of data is not guaranteed but represents the author’s best judgment and can be derived from a variety of sources. The information is subject to change at any time without notice.