Copper Is Telling Us Something Huge

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I read this report that said that copper has lost its edge as a leading indicator. I think this report is rubbish. Firstly, one should never use correlations or divergence to trade or invest – that’s akin to gambling when there are safer, surer ways to make proper analyses without being so speculative.

This report misses the main point by a mile. It says that copper as an indicator has lost its way. But has it? It says that the US economy has been doing well as so have the markets. Have they? Really?

So while the US market continues to stay resilient and its data continues to imply that all is well, we ignore copper because its lost its shine?

copper

In my opinion, most of America and its reporters have looked past one major possibility that copper is pointing to because they never had such a situation plague them in their history – Deflation. And this Deflation is currently in full force. The markets and the economy are lagging indicators.

Although they never admitted it, the US had been going through a minor Stagflationary period between 2010 and 2014 when their inflation keep rising while growth stayed stagnant (but in positive).

We can argue the validity of the market run – whether its really because the market is doing well versus buybacks, lower volumes and index manipulation.

We can also argue about the employment rate, GDP and economic data versus creative accounting and statistical manipulation.

But the one thing we can never discount is the force of actual Supply-And-Demand in the commodities space.

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