Dr. Copper is Talking, Are You Listening?

Dr. Fauci still believes there are precarious levels of COVID-19 cases.  But he’s the only one.

By now, even the most fearful amongst us have come to a very obvious conclusion.  Fauci isn’t a real doctor.  He’s a quack.  An imposter.  A fraud.

Most people of sound mind and honest intentions are ready to move on.  Here in the ‘land of fruits and nuts’ things are even opening back up.  Governor Newsom, compelled by a recall election, is now granting some slack to the plebs.  He has to…or he’ll lose his job.

The reopening of an economy following a great plague – or even a moderate virus – is a remarkable time to be alive.  The impossible becomes possible.  DOW 36,000 is now within reach – only 22 years late.

Indeed, it feels great.  The stars have never burned brighter.  Water has never tasted sweeter.  And the first hues of sunrise have never been more colorful.

Yesterday the Commerce Department reported that Q1 GDP increased at an annualized rate of 6.4 percent.  This marks the second highest rate of quarterly growth since 2003 – exceeded only by the epic bounce in third quarter 2020.

But, alas, it did not live up to expectations.  Egghead economists surveyed by Bloomberg predicted Q1 GDP growth at an annualized rate of 6.7 percent.

Somehow $2 trillion in stimulus couldn’t nudge GDP growth above expectations.  But we’re certain the Commerce Department will make up for the 0.3 percent miss in their two scheduled forthcoming revisions to Q1 GDP growth.

Regardless, at this point who really cares.  GDP is backward looking.  What can we expect going forward?  Where are things headed next?

Dr. Copper

To answer this question, we’ll consult with a real doctor – not a quack doctor like Fauci.  Specifically, we turn to Dr. Copper for an honest answer…

Dr. Copper – the metal with a PhD in economics – is always the first to know which way the economy will go.  Copper’s broad use in industry and many different sectors of the economy, ranging from infrastructure to housing and consumer electronics, makes it a good early indicator of economic activity.

When copper prices rise, economic activity soon often follows.  When copper prices fall, the economy often then stagnates.  Over the last year, the price of copper has risen over 90 percent.

Copper is now at a 10 year high of $4.50 per pound, and just a scratch below its all-time high of $4.6255 per pound.  What’s more, the price of copper could go much higher.

Certainly, some of copper’s price rise may be attributed to rising demand for semiconductors, cellular towers, and other electronics.  But at least some of the most recent price rise is due to supply disruption.

The President of Chile, Sebastian Piner, recently had the gall to tell his country’s workers they could not make a third round of early withdrawals from their pension funds.  Piner, a Class A fuddy-duddy, still holds the antiquated belief that one must be retired to spend their pension fund.  And now this is contributing to a global copper supply crunch.

For example, this week port workers in Chile went on strike in protest of Piner’s blockage of additional early withdrawals from pension funds.  The strike threatens to disrupt copper shipments.

The reason this matters is because Chile is the world’s largest copper producer and is responsible for a quarter of the world’s copper mine production.

[Editor’s note: Paid up subscribers to the Wealth Prism Letter are sitting on 235 percent gains on shares of copper miner Freeport-McMoRan, which was recommended in February 2020.  The May edition of the Wealth Prism Letter will be published this coming Monday Morning, May 3.  Subscribe today to get first notice of our new recommendation; one with very promising prospects.]

What to make of it…

Dr. Copper is Talking, Are You Listening?

Copper’s price has been rising for much longer than port workers have been striking in Chile.  We believe it will continue to rise long after workers return to the docks.

Perhaps Dr. Copper is telling us the economy is on the up and up.  That a new building boom has commenced.  That we’re entering a post-COVID-19 period of renewed prosperity.  Yet if you close your eyes and put your ear to the ground you’ll hear Dr. Copper telling something much, much more.

Specifically, you’ll hear Dr. Copper telling you that money supply inflation leads to asset price inflation, and commodity price inflation, and consumer price inflation, and, ultimately, complete societal breakdown.

The Federal Reserve’s balance sheet has doubled over the last 18-months.  Similarly, the price of copper is up over 90 percent over the last 12 months.  What’s next?

Are you ready for your grocery bill to double over the next year?

You should be.  Crop prices are now at an 8 year high.

Without question, rising consumer prices will amp up to a fever pitch over the hot summer months.  That’s when it will become apparent that the post-pandemic economic rebound was nothing more than an inflation surge.  Copper is telegraphing this.  Agriculture prices are too.

Gold and silver, confounded by enthusiasm for cryptocurrencies, have been left behind.  All the reason to add more to your stash…while you still can.

Sincerely,

MN Gordon
for Economic Prism

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