The stories since the start of the trade war tend to verify what most intelligent people knew long ago(from the UK Guardian):
Demand for copper to dramatically outstrip supply within decade
This key excerpt highlights what anyone with more than two brain cells knew before the data center boom was promoted by financial and mainstream media:
Supplies of the metal, a key component of every form of electrical energy system at present, will fall 30% short of the amount required by 2035 if nothing is done, analysis by the International Energy Agency predicts.
Of course with that already developing crisis for electricity producers, distribution, and manufacturing wasn’t enough, President Donald Trump announced a 50% tariff on copper effective August 1st. So far the administration does not seem ready to waive this so prices probably will only go much, much higher as highlighted in this CNN article today:
Copper prices have surged to record highs — and they could jump higher. Here’s why
This one excerpt spells out why it is INFLATIONARY despite the nonsense spewed by pseudo-economists promoting the book of the financial houses they represent:
The US imports over 50% of the copper it needs, primarily from South America, Hansen said, “with no clear path to improving that for years to come.”
That’s because it takes almost 32 years, on average, from the discovery of mineable copper in the US to production, according to S&P Global Market Intelligence. And the end result of a big and fast copper tariff could simply be higher prices for many items, economists say.
“A tariff-induced price premium risks making copper—and by extension, US manufacturing and infrastructure—materially more expensive,” Hansen said.
But don’t worry, we don’t use copper in anything important if one is to believe the nonsense from people who think this is a non-inflationary event.
Meanwhile, Dr. Copper is holding the level above $5.50 since the announcement and continues to look like it wants to break out higher.
There is absolutely zero reason to believe this trend will break any time soon, especially as the administration and his minions antagonize our trading partners.
Dr. Copper performs more than one function however, besides predicting inflation. It sets the trend for precious metals, especially gold, as inflation risk becomes elevated. If things are “normal” in an economic sense, whatever that is, they should move in parallel and over the past year, despite my personal chart crime below, that does seem to be the pattern.
Until Dr. Copper and the Trump administration perform a magical reversal, assume prices will go much higher, for much, much longer.
It is not only the demand curve, geopolitics, and concerns about demand for the new artificial intelligence monster that will drive prices higher however, the central banks of the world will face that age old dilemma about stimulating or killing growth that weighs in the outcome:
