The copper market is often viewed as a barometer of overall economic activity. This makes complete sense, given its widespread industrial use. Copper has not performed well this year, however, and is poised to see its first annual decline since 2015. After rising by some 32 percent last year, prices have already declined by roughly 17 percent year-to-date.
Of note, copper actually was higher over the first six months of the year before dropping by a whopping 20 percent in a period of just two months. With few mining disruptions to speak of this year, the production of the metal has been better than forecast.
Copper’s declines began around the same time as tariffs were imposed by the U.S. on China and as the global war over trade began to heat up.
Speaking of China, its benchmark stock index has declined by some 25 percent year-to-date and recent data seems suggestive of an economic slowdown in the region. As one of the globe’s largest consumers of raw materials and commodities, such a slowdown does not bode well for copper and other base metals.
The war on trade is already affecting material costs and will plausibly have a large effect on equity markets as well. Companies that cannot pass higher costs onto consumers will see lower earnings, while companies that do pass on costs may see declining consumption due to higher prices. Either way, the situation may potentially weigh on stocks and the economy.
The turn in copper prices could be indicative of a much larger problem, and now is the time to pay attention. As copper prices continue to sag, more and more pressure could be seen in global stocks and economies. Markets could potentially enter what some analysts have referred to as a “lost decade” of little to no upside.
Copper is not the only market flashing warning signals. Numerous commodity-based ETFs and indexes have now broken down below key support levels, suggesting that lower prices could be seen in numerous areas from agriculture to energy.
In short, there may be no escape from the damage inflicted and both stock as well as commodity investors could see a protracted period of lower prices.
With so many clear warning signals flashing red, now may be the time to consider building a significant allocation in an asset class-perhaps the only asset class-that can potentially rise in value during such a period while also providing a hedge against the numerous economic and geopolitical risks currently being seen. A significant allocation in hard, physical gold may be your best bet.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have, and can even show you how simple it is to incorporate this key asset class using your IRA account.
Don’t wait for the next stock and commodity bear market to take hold before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now,Tags: china, copper, lost decade, mining, supply, trade war