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What’s Up Doc? October 4th, 2019 by John Gross

That’s the question people around the world are asking of the Good Doctor Copper.

On Friday, the Financial Times published an article entitled “Copper Price Reflects Grim Assessment of Global Economy”.

The piece went on to cite a variety of issues weighing on the world that we are already aware of –

US / China and US / EU trade problems; Brexit, slowing global growth, negative interest rates, fears of a recession, along with a growing political crisis unfolding in Washington, etcetera, etcetera.

Also last week, our friend Andy Home, a very talented analyst and author wrote an item for Reuters titled “Copper Trapped Between Faltering Supply and Weak Demand”.

Look it up, it’s an excellent read.

From where we sit, the difficulty for copper, as well as other industrial materials can be summed up in a word – Uncertainty.

When companies here, and around the world don’t know what policies are going to be for trade, the economy, taxes, tariffs, interest rates, or politics, they do nothing until clarity returns.

And there are other issues also impacting the markets.

Last week we saw LME inventories of copper climb 36,175 metric tonnes in one day.

Let’s see, that equates to nearly 80 million pounds, or about 2,000 truckloads of metal. Hmmm . . .

LME inventories of aluminum rose 51,800 mt, or about 114 million pounds last week – that’s a lot of beer cans.

Of course the physical metal didn’t move, it was just a paper transfer. When is the LME going to change this charade of absurdity in inventory reporting?

In any event, Dr. Copper is no stranger to strange and inextricable things going on in the markets.

The attached Copper Journal from 10 years ago reminds us that ‘the more things change, the more they remain the same’.

We’ve said it before, and will say it again – the further copper falls, it will be digging a deeper and stronger foundation for the next Bull Market to begin.

Regards,
John


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