ETF Trends
ETF Trends

Copper-related exchange traded funds (ETFs) and exchange traded notes (ETNs) hit a low in November, but since then they have been steadily climbing. What’s driving it?

The Tactical Investor on Seeking Alpha notes the typical thinking that the economy usually mimics the copper markets. If this is true, copper could be sending some signals that there’s a change in the market’s direction in the offing.

During the last big correction earlier this decade, copper hit a  bottom in late 2002. While history should not be your sole guide for investing, since every situation is unique, it’s interesting to note.

Today, copper has erased its recent declines as of midday, reports Anna Stablum for Bloomberg. Copper could be heading for $4,450 a ton, one broker notes. Prices today are currently at $4,382.50. Inventories of the metal are rising fast – 48% so far this year. While stockpiles are rising, many are looking at China, which has been buying large amounts of the metal. China is the world’s biggest copper consumer.

The metal is an indicator of future global growth because of its use in plumbing and wiring. In the first quarter of this year, copper rallied 31% and was the second-best performer after gasoline.

  • iPath DJ AIG Copper TR Sub-Index ETN (JJC): up 41.4% year-to-date

  • iShares MSCI Chile (ECH): up 17% year-to-date; copper makes up 50% of Chile’s total exports

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.