The Gold Report
The price of copper is traditionally such a good indicator of the economy's health that copper has earned the nickname "Dr. Copper." In this chart, we see copper trading today at about the same level as it was for a few years prior to the crash of 2008. At $3/oz., copper today is worth almost five times as much as it was in November 2001, when most commodity prices hit bottom. That was also the end point of the 2001 recession, and also the beginning of what would be many years of very accommodative monetary policy from the Federal Reserve.
I keep hearing the drumbeat of deflation concern, but it's hard for me to understand. Back in the early 2000s deflation risk was extremely high: gold fell to $260/oz., most commodity prices hit lows they hadn't seen since the 1970s, and the dollar was soaring against most currencies. Now all these key indicators of the scarcity of money are reversed: commodity prices are near all-time highs, gold is $1200/oz., and the dollar is in the lower end of its historical trading range vis-à-vis other major currencies.
If nothing else, copper prices today tell us that deflation is not a concern but that inflation is. I think copper also is telling us that the global economy is pretty healthy, as demand for the metal has been unusually strong for a number of years. My friend Mike Churchill points me to an interesting story suggesting that copper supply is also relatively tight. Whatever the case, $3 copper is saying that deflation and recession are simply nowhere to be found in the global economy.
Notable Quotes
"ROG's Burkina Faso deposit will be easy to mine, inexpensive to build and very profitable." (5/20/13) Roxgold Inc. - The Gold Report Interview with Brent Cook More >
"AMM is the kind of company an investor wants to be involved with." (5/20/13) Almaden Minerals Ltd. - The Gold Report Interview with Brent Cook More >
"ATY had some very good drill results and its VMS project is certainly economic." (5/20/13) Atico Mining Corp. - The Gold Report Interview with Brent Cook More >
"I like LYD because of its simple, low-capex project." (5/20/13) Lydian International Ltd. - The Gold Report Interview with Brent Cook More >
"TMM released record production of 28.3 Koz Au for the quarter." (5/8/13) Timmins Gold Corp. - Joseph Fazzini, Dundee Capital Markets More >
Dr. Copper Says Patient's Fine
Source: Seeking Alpha, Scott Grannis (7/7/10)
"Copper says deflation and recession are nowhere to be found."
More Experts
"Drill results from BAR's Martinière indicate a growing, fertile gold system." (5/13/13) Balmoral Resources Ltd. - Eric Lemieux, Laurentian Bank Securities More >
"SAS had a strong cash position of $32.1M at the end of Q1/13." (5/13/13) St Andrew Goldfields Ltd. - Eric Winmill, Casimir Capital More >
"GRG has an exciting high-grade silver discovery and just released an NI-43-101-compliant resource estimate with 105 Moz Ag eq." (5/17/13) Golden Arrow Resources Corp. - The Gold Report Interview with Thibaut Lepouttre More >
"THO's Escobal remains on budget and on schedule; its progress is encouraging." (5/10/13) Tahoe Resources Inc. - Chris Thompson, Raymond James More >
"We reiterate our Outperform rating on P and it remains one of our top picks." (5/10/13) Primero Mining Corp. - Shawn Campbell, Macquarie Capital Markets More >