Why Copper Is Such An Important Economic Indicator!

what is an economic indicator

For decades, copper has served as an effective barometer of the economic health of a region. This amazing consistency of ability to gauge a realistic prognosis of an area’s economic vitality is precisely why financial experts have traditionally referred to copper as “Dr. Copper!”

Copper is a relatively inexpensive and extremely plentiful metal with numerous useful properties. It effectively resists corrosion and is a very effective conductor of both electricity and heat.

This quite naturally makes copper a prominently relied upon and utilized “center piece” of any emerging or expanding industrial economy. From electrical wiring to plumbing, from radiators to air conditioners, they all require the services of Copper.

Now, we aren’t just talking “Dr.” as in “medical practitioner” bringing health and vitality to the region, but also using the term “Dr.” to refer to an educated “doctorate” or Ph.D. in economics!

You see, consistently throughout the decades and across the entire globe, one can very effectively see precisely where we all as a whole, and any particular country is heading economically, simply by watching the price and what they are currently doing with copper.

This is because copper is such a greatly relied upon, highly valued and widely utilized metallic element within every aspect of a society undergoing a serious growth phase and process of advancing toward a more “state of the art” existence.

This means whether you’re talking about massive construction projects, infrastructure renewal, telecommunications modifications, medical, technological and /or energy option exploration and research, if it’s happening, then “Dr Copper” is heading up the surgical team at work!

Over the past century, just “industrial” demand alone

for refined copper has increased from 500,000 metric tons to over 19 million metric tons. As our increasingly smaller world continues to experience population growth along with progressive expansion, the demand for copper will exponentially increase.

The dramatic rise in need for copper will naturally increase the demand for new mines and processing plants, as current facilities are upgraded and expanded. As those “less developed” regions begin to expand their infrastructures, copper naturally serves as the most reliable building block” from which to build a new civilization and improve upon average living standards. A perfect example is what we have been observing in the recent Chinese construction boom!

But, as the most reliable indicator of the global economy, be wise and remember the old adage” what goes up, must comedown!” Copper is famous for doing precisely what the economic conditions are doing all around it, so when things are financially great, copper is way up and soaring with the eagles.

When things are down, copper takes a dip as well, and often production is severely cut back or completely halted until demand increases. So while copper has dropped from its high of $4 per pound last year, it now appears ready to once again "rise" with global economic stimulation projects.

So while warehouse stock levels of copper are currently down, due to drastically reduced mine production as well as substantially lower prices being recently fetched by copper on the market, there could very likely be a strong rebound for copper, especially during the drier construction months in the west.

Visit our homepage for the latest oil prices and energy news.

Source: oilprice.com

Category: Forex

Similar articles: