Here's Why Copper Is Now Flashing A Huge Warning Sign For Stocks

Well, Robert Prechter of Elliot Wave says that as the debt bubble implodes and there is a massive collapse in the "debt as money" supply there will be a titanic liquidation of all assets and a rush into cash......and that includes a sell off in all commodities including gold. I'm no expert but Prechter has been right so far...including a call a couple of weeks ago that the market is topping and now it is all down hill.....for the next 6 years !!

So for me, as a little guy, I am hoarding cash....real dollar bills....not money market funds....or other instruments based on debt......but in the end Prechter also says that the dollar will eventually go the way of all fiat currencies and die...and then gold will be back. It is all a matter of timing......like everything else in life, I guess.

I’ll admit that I don’t know much about technical analysis, but copper “soared” along with real estate prior to the 2007 downturn, then went over a cliif in 2008, bottoming BEFORE the stock market did. It stalled at a level far below the prior top back in mid april, before the current Euro panic. Looks awful to me.

The chart at the top of th page shows copper plunging from Juy ‘08 until the end of the year Copper like a leading indicator in the beginning of ‘09 by turning around and commencing a steady powerful rise, almost tripling in price by the end of Jan 10. It has moved sideways since, and has just plunged below the 100 day moving average. If copper is a leading indicator, that’s bad news.

To me, copper is an industrial commodity, like steel, or cement, or anything else that hurts when you drop it on your foot. I think these normally rise during periods of economic growth, or from March 2009 to present, a recovery. During a deflationary collapse, like we had in the 30’s depression, or 1980 to 1981, or ‘2008, commodities fall out of bed. So it seems to me that copper’s recent plunge in recent weeks could be signaling bad times ahead.

I find Gold harder to understand. It has limited industrial usefulness (unlike platinum). It’s a great inflation hedge. And it’s supposed to be a “currency of last resort in times of uncertainty” and I don’t know what the hell that means.

I’m not out of the market, I’m just being careful with most of my savings in cash or short term bonds.

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