A four year nearly straight down move in copper has temporarily bottomed with new lows at $2.20 per pound. The fall from the $4.60 peak in 2011 has occurred as economic indicators have steadily improved and the unemployment rate has dropped down to 5 %.
Copper price trends had been use to forecast slumps or surges because of its industrial demand.
Times change and technology innovations have lessened the use of copper.
The pre-financial crisis housing boom put high grade on the radar to indicate broad strength.
Since that time, a disconnect has occurred as copper has seen high prices even when the economic rebound was stalled.
Just recently, a gross domestic product rate at a robust 3.7% last quarter coincided with drastic depths in copper. Private sector job growth has stretched to 65 consecutive months totaling more than 12 ½ million jobs.
The copper decline can also be attributed to strength in the Dollar.
Commodities have suffered with the Chinese slowdown and the battle against the greenback go go gains.
Any macro market diagnosis would be lacking if copper was the only test that the patient was put through.
The global economy was not robust when copper was strong in 2011, so to say that high grade prices near $2 per pound are a sign of a sickness is a misplaced theory at best.
