Copper prices are starting to head upwards again, after a month long decline on worries that events in Europe might slow global growth.
In my 2012 outlook (see 2012 Outlook), I discussed how copper prices are a great indicator on the health of the global economy:
Copper is an amazingly conductive metal, AND a fantastic gauge of the overall health of the global economy. From September 2011′s Economist:
“Copper’s excellent conduction of electricity and heat means that it is used not only to cable and pipe the globe. An average car contains over 25kg of copper; electronic gadgets, from PCs to mobile phones, use copper for wiring and contacts. Its ubiquity means that rising demand should provide an early indication of an uptick in manufacturing and construction. Copper sagged in the early stages of the credit crisis, for example, and then started to pick up at the end of 2008, some months before the stock market began to rebound.”
Investors should keep an eye on copper prices as a gauge on the overall health of the global economy in the upcoming months. A trend above the mid-50’s will indicate that investors believe global growth will continue to rise – either from current trends or with the help of Fed.