If you want to know the outlook for an economy, don't ask an economist the price of copper has a much better track record. Because the metal is used in so many areas of the economy, its price is seen as a good activity bellwether. It is known as Dr Copper' due to its ability to outsmart PhD economists.
On Monday, the price of copper fell to seven-week lows of around $7,700 per tonne as stocks unexpectedly increased. Bears point to a slowing Chinese economy as one reason for this.
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China's construction and infrastructure boom is certainly coming to an end and recent GDP growth has been weak by Chinese standards, slipping recently below Beijing's precious 8% barrier.
Ultimately, prices for most assets are determined by supply and demand. Increased production by copper miners could be a reason for lower prices. Many mining companies say they foresee a balanced market. But that seems optimistic in the face of waning Chinese demand.
It's worth remembering that this market can move very quickly. Copper prices halved in a matter of months during the financial crisis in 2008 to less than $4,000 per tonne. Dr Copper's latest wobbles should make China bulls especially nervous right now.
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