Category Archives: Take that, Copper

It ain’t about cops and robbers!

Copper’s warning, gold’s scolding

walker_obs-rvs_webIt is often said that the price behavior of copper can be an early tell on what the market’s next move will be. The reasoning is relatively simply (perhaps too much so). Because copper is used in nearly all aspects of economic activity, ranging from homes and electronics to factories, it is most sensitive to global-growth expectations and turning points in business cycles. As prices rise, demand for copper increases, which in turn means that activity likely is increasing before it shows up in fundamental data. Think of copper more broadly as an indicator of industrial activity. Continue reading

Dr. Copper is Waving a Red Flag

copper sky_posterOn the surface, there are confusing signals by major commodities in 2014 as some have gone sharply up while others have done the opposite. The source for the disagreement is clearly rising geopolitical tensions that mask major commodity users’ economic deterioration.

Sooner or later, anyone close to the inner workings of the stock market learns a lot of sayings from the trenches. “Don’t fight the tape” and “the trend is your friend” pretty much say the same thing. “Don’t fight the Fed” is a bit more strategic, but a more obscure saw that bridges the wide gap between economics and the tape is “Dr. Copper is the only metal with a Ph.D. in economics.”

I have never met an economist that is a good short-term trader or a short-term trader that is interested in economics. I am sure they exist somewhere, but they are a rare breed. Still, economics and trading come together in the copper trading pits due to copper’s highly specific industrial uses that show copper demand to have a direct correlation with economic growth. Continue reading

Copper Riots of 1662

Copper-Riot-1662Money has always been fiat whenever government gets involved. Aside from the debasements of England under Henry VIII and the Great Monetary Crisis of the 3rd century in Rome or the Great Monetary Crisis of 1092 in Byzantium, we even see attempts by city states like Florence. However, one of the great riots over money took place when the Russian government began producing copper coins and assigning them equal value to silver currency to meet expenses. The effort failed and silver vanished from circulation, and the entire economy collapsed. The copper money was was naturally devalued in purchasing power and then there was widespread counterfeiting operations since the official value of the copper coinage became far in excess of the cost of production.The economy collapsed into a deflationary black hole as bushiness collapsed and unemployment rose dramatically. This erupted into what has become known as the Copper Riots of 1662. Continue reading

Copper Use to Increase in Clean-Energy Push, Group Says

Morg_cpr_obvsCopper will play an “integral role” in the push for cleaner energy after President Barack Obama announced a plan to limit carbon emissions, a policy group in Washington said.

The metal is a key component in renewable energy because of its efficiency in conducting power and use in solar panels, wind turbines and electric automobiles, the American Resources Policy Network said today in a statement. The group advocates policies aimed at expanding mineral production in the U.S.

The centerpiece of the president’s plan, announced yesterday, is a limit on carbon emissions from all power plants, a move opposed by utilities including Southern Co. (SO) and American Electric Power Co. (AEP) and Peabody Energy Corp., a coal producer. The proposal also seeks to promote renewable-energy development on federal lands, and energy-efficiency standards for appliances and government buildings. Continue reading

Copper: The New Silver

saint_cpr_obsWhen one discusses the value of coins, or rounds, or bars the first suspect that always seems to get mentioned is the king of metals: gold. Regardless of what form it takes, gold is generally recognized around the world as having value, especially in relationship to the local currency. With few exceptions, gold is involate, In fact, it has been said that all the gold mined in the history of this world is still in existence and much of it is in a form that can be used for transactions between persons, cities, or countries.

Silver on the other hand, has had a much rockier existence. It is both a precious metal and an industrial metal, and a metal that is useful in the healthcare field. This multiple personality has led to silver being used in minute amounts in an ever growing number of industries which find it more effective, both in terms of cost and in terms of performance. Even so, the sheer amount of silver compared to gold has kept it from being valued as highly, as is the tendency of silver to succumb to the elements. Continue reading

Copper: The Prince of Precious Metals

StG_FE-obvs_smallHistorically speaking gold is considered the King of precious metals for reasons that need little explanation. If gold is King, then Silver would be considered the Queen, yet little is known of the Prince of monetary exchange – Copper.

Although 90% junk silver has been the coinage of choice for “Preppers” for many decades – it is, at the present in horrible short supply (at least two of the nation’s largest suppliers have little if any to sell); but even with the current downtrend in “spot” silver prices – the demand is so high for it – that the average cost (if any can be found) is $5.25 to $5.50 per ounce above “spot.” This translates to a cost of a full bag at just shy of $20,000 – over $3,000 higher than normal market prices at the present “spot” levels.

In addition to this – I believe that; unlike 1979-80, when silver previously reached $50.00 per ounce – our fathers and grandfathers owned “filling stations (we had no mini-markets at that time), who understood what those old silver coins were really worth. Those days are gone, as we now have foreigners who are running the show, who may not understand.

Enter the ounce….  Continue reading

Copper: Part I The New Currency.

Morg_cpr_obvsDecember 2010 – I don’t know if you have noticed what I have, but lately it appears that people are using Copper as a poor mans currency. I started to notice during the crash of 2008, that copper was being sold in a .999 pure bullion. The photo attached is for a single troy oz of “Fine Copper”. The list price for this copper, as is, was 12 dollars. Think about that for a moment.

Copper sells for about $4 per pound in the futures market. The contract size is for 25,000 pounds, and it costs $250 dollars per penny when quoting copper, the December (2010) forward month is currently quoted at 400.60 pennies, for a total cash cost of $100,150 per contract.

I don’t know about you, but I would love to have a business where my future cost of inventory was 27 cents per oz, and after some remarketing costs, I am able to charge $10 to $12 per oz. Continue reading