Copper prices

[Team Sergeant]

hey nmap,

Is the huge drop in copper (the last three months) tied to the housing industry? And can we expect to see other metals dropping in price?

TS

[rubberneck]

Cooper used in construction accounts for nearly 50% of usage here in the states but a drop off in construction is only one of the causes for the price drop over the past 6 months. Demand in China has tailed of significantly as their economy has contracted at a rate faster than ours, but more significantly the labor strikes that crippled Chilean Copper Mines (Chile accounts for 35% of the worlds copper production) for much of 2006 and 2007 have been settled.

Aluminium, zinc, lead, nickel, tin and steel are all down significantly over the past 6 months, as are precious metals (Gold, Platinum, Silver and Palladium).

[Defender968]

If the price of metal continues to fall, maybe ammo prices will start dropping as well, if of course the Dims don't tax ammo to death.

[Team Sergeant]

Originally Posted by rubberneck

Cooper used in construction accounts for nearly 50% of usage here in the states but a drop off in construction is only one of the causes for the price drop over the past 6 months. Demand in China has tailed of significantly as their economy has contracted at a rate faster than ours, but more significantly the labor strikes that crippled Chilean Copper Mines (Chile accounts for 35% of the worlds copper production) for much of 2006 and 2007 have been settled.

Aluminium, zinc, lead, nickel, tin and steel are all down significantly over the past 6 months, as are precious metals (Gold, Platinum, Silver and Palladium).

Here in Arizona theres been a layoff of six hundred copper mine workers in the last few weeks due to the price of copper.
In just the last three months copper has gone from 3.50 to 1.50 a pound. The housing crunch has been around a bit longer. I was wondering what has affected the price so significantly in just the past 90 days?

Originally Posted by Defender968

If the price of metal continues to fall, maybe ammo prices will start dropping as well, if of course the Dims don't tax ammo to death.

I had the same thoughts.......

[Sigaba]

nmap--

An additional question. We in California are getting almost daily news reports of copper being stolen from every conceivable source (including graveyards--what is wrong with people?).

Is the black market for copper so pronounced that it can impact demand in the legal market?

[Team Sergeant]

Originally Posted by Sigaba

nmap--

An additional question. We in California are getting almost daily news reports of copper being stolen from every conceivable source (including graveyards--what is wrong with people?).

Is the black market for copper so pronounced that it can impact demand in the legal market?

We had the same problem here in Arizona, so bad that some of the thieving idiots decided to hit local electric substation to steal copper wiring. Not a smart move I saw the "after" pictures.

With the price of copper hitting bottom maybe this will all cease and the bad guys will go back to armed robbery

[rubberneck]

Originally Posted by Team Sergeant

Here in Arizona theres been a layoff of six hundred copper mine workers in the last few weeks due to the price of copper.
In just the last three months copper has gone from 3.50 to 1.50 a pound. The housing crunch has been around a bit longer. I was wondering what has affected the price so significantly in just the past 90 days?

Look at a graph of the Dow Jones Industrial average since September 22nd 2008 and compare it to a graph of the spot price on copper for the same period. They have moved in unison for the most part. It started with the news of the failure of Lehman Brothers on the 15th, then on the 21st the troubles at AIG came to the surface and we were off to the races on the 22nd across the board. The drop in the price of Copper, as a commodity, has been market driven since then.

[caveman]

Well I guess I'm glad my family's barn burned down last summer then. I went home for the weekend to help clean up and made something like $250 dollars picking scrap metal out of the rubble.

[nmap]

Originally Posted by Team Sergeant

hey nmap,

Is the huge drop in copper (the last three months) tied to the housing industry? And can we expect to see other metals dropping in price?

TS

Team Sergeant, there are those who suggest that copper prices are a good way to measure the health of the entire global economy. Copper is also used for electric motors and generators, transmission lines, and so forth. The big shovels used in coal mines use electric motors.

Uses and production of copper

Largest electric coal shovel

So it's not just housing - it's housing plus everything else.

Here's a long-term chart of the price: Chart Link

Each line is 1 month of price action. We've come down by about 60% - and we're still high compared to prices over the last decade! Trends persist, so the question becomes: "When will the global economy recover?" I have a nasty feeling that it will be awhile. That suggests the answer on other metals is that they will continue down for a time. For example, the catalytic converters on cars require platinum - so the reduced demand for cars has taken about 60% of the value off that precious metal as well.

This is complicated by the increased value of the dollar. You can see what's happening HERE. Notice that it has broken the blue trend line. The dollar tends to be a safe haven during dangerous times - and, in addition, many debts are denominated in dollars. So as the dollar goes up, metals go down - for that matter, all commodities tend to go down.

Unless and until the global economy shows signs of improving, metals are likely (in my opinion) to continue lower. Right now, there are opinions that the global economy may improve, but there is almost no hard evidence.

There are dark rumors that Ireland's banks are going the same way as Iceland's - and if that happens, the global economy will take another shock. It won't recover quickly, and we could go over the brink into long-term deflation.

Sigaba, I don't think that theft can change the supply-demand equation much. On the one hand, stolen copper increases supply - but on the other hand, the items stolen generally must be replaced. If the stolen copper represented something that wasn't being used - in essence, recycling by alternative means - then it might have some minor positive effect. However, I get the impression that isn't the case.

And yes, it just might put downward pressure on ammo prices. Maybe that's the brass lining on the deflationary cloud?

[nmap]

By the way...I just finished reading the attached newsletter from Dow Theory. It's along the same line as the thread, and the author (age 84) has been publishing for 50 years. I've attached a copy.

Whether he's right or not, there are some ideas worthy of consideration.