Many, many years ago, The Copper Journal created The Base Metals Barometer, a composite index of copper, aluminum, lead, tin, nickel, and zinc.

By itself, the index number is meaningless, other than to provide an overall view of how the nonferrous metals complex is performing, and to illustrate the overall trend of the market.

Interestingly, over the past year or so, the BMB fell to, and rose from 2.25 a few times, and during November, it averaged 2.26.

When we look back over the past 15 years, 2.25, for whatever reason seems to be a ‘pivotal point’.

This cranked up our curiosity enough to ask ourselves how the BMB compares to the individual metals in the basket?

And the results are fascinating, indeed.

Take a look for yourself – they are the 2nd through 8th charts in, and as we typically like to say, each chart tells its own story in its own unique way.

Just a few obvious points to ponder – every one of the charts had the BMB coinciding with the low point in prices during the financial crisis at the end of 2008, (no surprise there) and every one recovered, as major central banks throughout the world pumped trillions of dollars into the global financial system.

The other observation is that generally speaking, each metal broadly tracks the BMB.

Not in lock step of course, but enough to be meaningful.

So, our concern for caution stems from the BMB sitting precariously just above the 2.25 line.

If history is our guide, a breach of this level suggests the potential for further weakness, and warrants a review of price protection plans.

Regards,
John E Gross

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