To The Moon

Look for copper stocks to move sharply lower in the coming months!

So many people, mainly politicians, still think the economy is doing well. Even Fed Head Jumping Jay Powell thinks it is. If that is true then copper should be doing really well.

But it’s not.

It’s in a bear market.

And it is going to go a lot lower.

Why?

I have been detailing for months the destruction of the house building industry. I told you it would happen months ago and it is happening right now. Home building is the biggest user of copper and home construction will be in the tank for months.

The auto industry is the second largest user of copper and it will hit the skids in a minute.

As the same time, third world countries are being squeezed by higher interest rates and a strong dollar so they will have to pump out much more copper to stay afloat.

A big reason I am short copper stocks is the chart. This shows the relationship between the yield curve and the price of copper.

A positive curve is positive for copper because it means the economy will be doing well. But a flat or negative yield curve, which we just hit, is negative for copper because it means we are going into a recession.

The chart shows this clearly.

So how do we make money?

You can sell short a copper ETF like CPER though liquidity is small. You could also short big miners like FCX which are huge producers of copper.

But my favorite is to short SCCO which is almost a pure play on copper while FCX produces a lot of copper but also lots of other metals.

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