Commodities Trading: Copper could predict a commodities collapse

Posted March 11, 2008

"Since 2006, base metals prices have gone into a sharp tailspin and corrected over 30% in the last 18 months. In 2007 alone, base metals declined over 20% even as other commodities were shooting to record highs. Why such a disconnect?" — Mike Burnick

by Mike Burnick, The Sovereign Society

Baltimore – (TFN): There’s a massive tug-of-war taking place right now between bulls and bears… and I’m not talking about the stock market here.

This bull/bear debate is happening in the futures market for industrial metals. The outcome of this tug-of-war will have a major impact on the health of the global economy, and of course for stock markets worldwide.

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According to a recent article in the Financial Times, “Debate is intense among analysts and investors over whether the commodity supercycle can be sustained.” Industrial or base metals have been one of the best performing asset classes this decade. Copper alone is up about 400% in price just since 2000.

Commodities Trading: Dr. Copper’s diagnosis

Since 2006, base metals prices have gone into a sharp tailspin and corrected over 30% in the last 18 months. In 2007 alone, base metals declined over 20% even as other commodities were shooting to record highs.

Why such a disconnect? The industrial metals sector is often viewed as a key leading indicator of health in the overall economy.

In fact, it’s been said that: “Dr. Copper” is the most accurate economic forecaster on Wall Street. So the reason for the swoon in base metals has everything to do with fears of a slowdown in global growth. Read on to learn whether copper is predicting a bounce or a crash in the commodities markets.

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