Obscure Economic Indicator: The Price of Copper

The metal tells us almost everything we need to know about the global economy.
By Daniel Gross
Posted Friday, Nov. 11, 2005, at 5:25 PM ET

For the nervous among us, looking at the headlines of the Financial Times can be a form of torture, what with high oil prices, global instability, trade imbalances, and the murky threat of China. But optimists should take cheer from the price of copper, a vital and frequently overlooked metal. It costs less per pound than coffee or hamburger meat. But as an investment, in the last few years it's been pure gold.

Gold, which is trading today for about $467 per ounce, is the glamour metal—as an investment, as a bauble, and as a contrary economic indicator. Gold rises when people fear instability and inflation. But workaday copper, which trades for about 12 cents per ounce, is another story. After iron and aluminum, it's the "world's third most widely used metal," as the New York Mercantile Exchange notes. (It wins the bronze medal for the most used metal.) And it's a great coincident indicator. As copper's fortunes go, so goes the world economy.