Breakout

Take the Money and Run From Copper, Says Dicker

Jeff Macke
Breakout

It's an old saw on Wall Street that the price of copper foretells the fate of the global economy. As a critical component in wiring, pipes and a fistful of other construction related products, copper is purchased in advance of any major industrial project. Increased copper demand pushes prices higher slightly ahead of or at least coincident with economic expansion, but traditional economic measures like GDP don't show up until months after the fact.

As a sign of their respect copper's tendency to lead economic news and a sly jab at economists copper traders bestowed an unofficial PhD in economics on the metal making it Dr. Copper. Unfortunately for copper bulls the doctor has been in failing health for the better part of two years.

After dropping for most of 2013 copper finally found a recent low near $3 early last summer. With prices up some 10% from the lows the question is whether copper is leading a robust period of economic growth or if the industrial metal has lost its predictive power after the gigantic emerging market and China bubble skewed the supply/demand equation.

Related: Emerging Markets Surging as Investors Buy Global Growth Story, Says Bob Doll

"It's become a total proxy for the Chinese trade and that's what causing some of the bounce," says Dan Dicker of OilPrice.com. He notes that traders with the guts and luck to buy companies like Vale (VALE) have been rewarded with huge gains over a short period of time. That's the good news. The bad news is Vale is still down 25% for 2013 and it's unlikely to make up the lost ground anytime soon even if the economy keeps chugging.

The problem is supply is overwhelming any demand pickup. Dicker sees demand growing by over 2% in 2014 but production is set to rise more than 5%. You don't need a PhD in economics to know that supply outstripping demand means lower prices.

The takeaway is the copper rally is giving shareholders an opportunity to gracefully exit their positions. "If you've had a Vale or a Freeport (FCX) and caught this move my advice is to take the money and run."

More from Breakout:

Another Gold Rally Bites the Dust

Facebook Shares Top $45: Time to Thrive, Not Just Survive

Has Leaderless Lululemon Lost Its Way?

Rates

View Comments (29)

Recommended for You

  • SHOE COMPANY: Our Ex-CEO Who Disappeared With All Our Money Called Us Over The Weekend, And Said He's Coming Back

    The missing CEO of show company Ultrasonic — who last week disappeared with the company's money   — says he's going to give it back. In a press release on Monday, Ultrasonic CFO Clifford Chan said  Qingyong Wu, the company's former CEO who was dismissed at a board meeting late last week, called him…

    Business Insider
  • New Site Releases Everyone's Past Online!

    A new site has made it simple to find the truth out about anyone's Past online. It's as easy as typing in a Name and selecting a State!

    AdChoicesInstant CheckmateSponsored
  • When the Dealership Steals Back the Car They Just Sold You

    You bought a car and a couple days later the dealership comes by in the middle of the night and steals it back from you. JT went to a car dealer and found a late model used vehicle he liked. The salesman and the others involved in the deal kept coming and going from the desk where he was sitting,…

    Oppositelock from RSS
  • The Kawasaki Ninja H2 - Understanding the Hype

    Here's what we know for certain about the Kawasaki Ninja H2: it will be officially unveiled next month at the INTERMOT bike show in Cologne, Germany… that's about it.  Is the Ninja H2 the most-hyped motorcycle in recent memory? The answer is debatable - the cruiser world certainly heard the…

    RideApart.com
  • The point where you might want to buy Tesla

    This has been a great year for Tesla. For founder Elon Musk, that means his shares have lost over $1 billion in value since the start of this month. Musk’s 28.3 million Tesla shares mean he still has $7 billion worth of shares.

    Talking Numbers
  • 5 Mistakes Renters Make

    Whether you are new to the renting game or a renting lifer, you’ll want to avoid common and costly renter’s errors. A lease is the contract between renter and landlord that specifies the rights and responsibilities of each party involved in a property. Every rental property and experience is…

    Good Morning America
  • Yahoo acquires Bangalore startup, sparking excitement all around

    This story has been updated to include Yahoo’s official response to our email.  Yahoo has followed Facebook and Google in acquiring startups based out of India. The deal is sparking excitement that global tech majors will look at Indian companies more closely as acquisition targets. Yahoo has…

    Quartz from RSS
  • View

    A Look inside Alberta’s Oil Sand Industry (16 photos)

    In 1967 Suncor helped pioneer the commercial development of Canada's oil sands, one of the largest petroleum resource basins in the world.Canada's oil sands industry is shrugging off declining world oil prices as some of the world's highest-cost producers

    Yahoo Finance
  • 1 Tip To Lose Belly Fat

    It's Hollywood's Hottest Diet And Gets Rid Of Stubborn Fat Areas Like Nothing Else.

    AdChoicesagoodcooksSponsored
  • Cramer: As stocks slide, should strategy shift?

    More than a few bulls spent the session battling an upset stomach as stocks tumbled for the third time in three days. Given the circumstances, Cramer says it's only logical to question whether your stocks have topped out for the year. Looking out to the horizon, Cramer says there are plenty of…

    CNBC
  • Washington DC Could Light Up the Debate on Legalized Cannabis

    Whitefish, MT / September 23, 2014 / Washington DC voters appear overwhelming ready to legalize recreational cannabis, based on a recent poll sponsored by NBC4, Washington Post, and Marist. The poll found that 65% of respondents supported Ballot Initiative

    Accesswire
  • The Debt That’s Robbing Seniors of Their Social Security

    The Senate failed to vote this week on a bill that would have allowed millions of Americans to refinance their student loans at today’s low rates. The amount of student debt held by Americans age 65 and older reached $18.2 billion last year, up from just $2.8 billion in 2005, according to a report…

    The Fiscal Times
  • Meet the Enemy of Retirement Security: Procrastination

    Young people have the world's most powerful investing tool at their disposal. Image source: Sakeeb Sabakka via Fotopedia. Last year, I signed up for a program called "Connections" through my alma mater . The program is designed to bring

    Motley Fool
  • My Wife Went Back to School for a Special Education Teaching Credential and We've Got Loads of Sallie Mae Debt Now

    Huffington Post Reader Question Dear Steve, My wife has $38k in new student loans for a Special Education Teaching Credential, the loan is through Sallie Mae. We make $160k/year in California with 8 children, total family of 10. We file Married Joi...

    The Huffington Post from RSS
  • Transocean Fleet Update: 2014 Out-of-Service Time Higher

    Offshore drilling giant, Transocean Ltd. (RIG), has provided a fleet status report for the period commencing Aug 21, 2014 to date. The value of all the new deals and extensions in contracts, during the aforesaid time frame, is estimated at roughly

    Zacks
  • Best Womens Wrinkle Creams 2014

    Mom reveals simple wrinkle solution that has researchers very excited. Try this free solution today to look and feel years younger.

    AdChoicesBellaLabs.comSponsored
  • Jordan backs Arab Bank support after 'Hamas' verdict

    Jordan's central bank said Tuesday it still supports Jordan-based Arab Bank, found liable in a US court of supporting terrorism, saying it had been unable to defend itself adequately. A New York jury found the multinational lender liable Monday on 24 counts of supporting terrorism by transferring…

    AFP
  • Play

    Cramer: Don't flip out on Alibaba

    CNBC's Jim Cramer shares his thoughts on Alibaba, Yahoo and tax inversions.

    CNBC Videos
  • Silicon Valley talent wars: Engineers, come get your $250K salary

    In Silicon Valley, even the smallest team of talented engineers can hit the jackpot. Take Instagram, which entered into tech folklore when its 13 employees -- only half of whom were developers -- created a simple photo-sharing app that wound up getting bought by Facebook for a $1 billion in 2012.…

    CNET
  • RadioShack may not have enough power to recharge its business

    Not long ago, RadioShack Corp. launched an effort called “Fix it Here,” an in-house service repairing mobile devices such as your smartphone or tablet. “That was the original mission for what RadioShack was, to do things like repairs,” said Stephen Baker, an analyst with the NPD Group.

    MarketWatch
  • Retire Calculator

    This retirement readiness calculator is intended to provide a rough idea of how long your retirement savings and income will last. As a general rule of thumb, people should expect their annual expenses during retirement to be roughly equivalent to what they are today. If you set aside $10,000 per…

    money.usnews.com from RSS
  • Chef Who Blamed Picky Customers for Shutter Says He's Tired of Trying to 'Satisfy Patrons'

    The San Francisco restaurant owner who blamed picky diners for the closure of his restaurant is defending his actions. The San Francisco chef that fired back at difficult customers last week with a very sassy sign is at it again. According to ABC7, James Chu — the owner and chef of SO Chinese…

    Eater
  • Living Paycheck to Paycheck? Here's Your Solution.

    This step-by-step article exposes a ridiculously simple method to add $1,000's to your bottom line year after year.

    AdChoicesMedia ForceSponsored
  • Russian assets firm on China data, newspaper report on sanctions

    MOSCOW, Sept 23 (Reuters) - Russian assets firmed on Tuesday, buoyed by positive economic data from China, a major market for Russia's raw materials, and by a report that the European Union might review sanctions imposed against Moscow over its role in

    Reuters