What Is Dr. Copper Telling Us?
The Red Metal has a Ph.D. in economics.
It has a better track record of predicting the economy than the Fed and every economist I know!
Copper is mainly used in the two most important sectors for the economy:
When the economy is booming, those two sectors will consume a lot of copper. And not just the US economy but the global economy.
The supply of copper is very stable. Grows slightly every year. Rarely are their disuptions. It is demand that drives the price of copper.
So, simply put, strong copper means strong economy.
But it is better than that! Copper is a leading indicator of the economy! A strong copper price means that global demand for copper will increase in 3-6 months. An increase in global demand for copper leads the global economy by about 3-6 months.
Now do you understand why I look at the price of copper every single day?
The chart above shows that copper has copper has just broken out of a multi-month high. This is a strong signal that the global economy is going to improve!
Wait! Yes, I have been telling you that the economy will go back into a recession this year. But copper is looking at two things that are causing it to rally:
- China has changed to a pro-growth policy that will boost demand in China, the most important gloval market for copper
- The market thinks the Fed will ease by May thus stimulating the economy in the second half of 2023
I agree with the outlook for China which is the most important market for copper but disagree with the Fed outlook in the US.
That still means copper can rally but not as much as the market will push it higher. But we could see the first leg of the Big Bull in copper come from demand from China and the second leg come from the US late this year.
So how do we make money from this?
- Buy copper stocks
- Buy copper
- Buy copper ETFs
Oh, and consider subscribing to Wall Street Winners!