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‘Dr. Copper’ Plunges In Worrisome Sign For The Global Economy

Written by Jesse Colombo | Aug, 15, 2018

As if the recent turmoil in Turkey, South Africa, and other emerging markets wasn’t enough, commodities including copper are now sinking as well. Copper, which is known as “the metal with a PhD in economics” due to its historic tendency to lead the global economy, is down nearly 4 percent today alone and 22 percent since early-June. Copper’s bear market of the past couple months is worrisome because it signals that a global economic slowdown is likely ahead.

The chart below shows how copper was bouncing around in a range between $3 and $3.3 per pound until it peaked and broke down in June:

Copper Daily Chart

The longer-term chart shows how copper surged after Donald Trump’s election win (due to expectations of an infrastructure boom), climbed within a channel pattern, and then broke down from the channel in late-2017. The $2 per pound support is the next major level to watch if copper’s bearish trend continues.

Copper Weekly ChartCopper and other base metals are falling for a wide variety of reasons including the plunge in Turkey and other emerging markets, the strengthening U.S. dollar, and China’s economic slowdown due to the trade war. If the dollar continues to rise and the emerging markets turmoil spreads (which I ultimately expect to happen), there is a high likelihood that copper will continue its downward trend.


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Jesse Colombo is an economic analyst and Forbes columnist who was recognized by the London Times for warning about the U.S. housing and credit bubble as a university student. Jesse continues to warn about dangerous post-2009 economic bubbles and has over 100,000 social media followers. Jesse graduated with a Bachelor of Science (cum laude) from Stony Brook University.

2018/08/15
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