Take physic, pomp

Charts of the day are…

…the five year charts for copper spot price and copper LME warehouse inventories. First the warehouse numbers…
…and today we note that there have been more than a few examples of Emperor’s New Clothes about these two charts recently, with market anal ysts and peddlers of financial dumbassery attempting to explain the future of copper via explanations of the interrelationship if the two charts. Hell, I’ve even been slightly  guilty myself on this score, but the fact is that if you step back and take a five year view there’s no real price correlation between bonded warehouse inventories and the price of copper.

Now the price chart:

Or perhaps more accurately, sometimes there is and sometimes there isn’t. Which is just as useless and perhaps even more dangerous, as it might keep you coming back to this issue and making the same mistakes over and over again. When a world commodity is subject to large scale speculation the way in which copper is subjected, its inventory numbers will be part of the speculative scheme. Trust your eyes and DYODD.

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