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In global macro circles, the metal copper is more commonly known as, “Dr. Copper” for its ability to predict economic cycles, much like someone with a doctorate in economics should be able to do.

The differentiating factor between Doctor Copper and the typical Doctorate in Economics is that the former has been around for millions of years, while the latter is a much more recent creation. In fact, the first Nobel Prize in economics was awarded in 1969.

Copper is known for its predictive ability due to overwhelming use in building construction and industrial production. According to copper.org, building construction is ~46% of copper use, electrical products are 23%, and transportation, consumer, and industrial product production comprising the remaining 31% of use.

Given its broad base use in many different sectors, we have had been focused on the pick-up in copper pricing over the last five weeks, which we believe is an early indicator of reaccelerating global growth and industrial production heading into Q1 2009. This pick up in pricing is shown graphically in the chart below. To be sure, bottoms are processes, not points… but this “re-flation” process continues to fortify itself.

Daryl G. Jones
Managing Director