CPER - Copper Price Outlook - June 2023 (Technical Analysis)

2023-06-28 03:35:00 ET

Summary

• We've written about copper several times already in 2023, and it's time to do so again today as any breakout in price later this year is likely to have significant implications for the precious metals, particularly silver.
• Global copper stockpiles have continued to be depleted as economic growth continues and the move toward EVs and other devices accelerates.
• The digital copper price has been in a steady downtrend of lower highs and lower lows for the entire first half of the year.

By Craig Hemke

We've written about copper several times already in 2023, and it's time to do so again, as any breakout in price later this year is likely to have significant implications for the precious metals, particularly silver.

Let’s start with a recap. Here's a link to our most recent post that was written in late March. The links to the other copper-focused posts are embedded within.

In the 90 days since that post, not much has changed from a price standpoint. However, global copper stockpiles have continued to be depleted as economic growth continues and the move toward EVs and other devices accelerates.

The key chart to all of these details is the available, above ground copper stockpiles. As you can see below - in a chart that needs to be updated - as of this time last year, global copper inventories were falling quickly.

But don't just take my word for it. Here's Robert Friedland, the legendary founder of Ivanhoe Mines, discussing the looming copper shortages on Bloomberg television a few days ago.

Though the investment world is slowly waking up to this pending crisis, the reality of the physical metal supply/demand picture is not yet apparent in the futures market. As you can see below, the digital copper price has been in a steady downtrend of lower highs and lower lows for the entire first half of the year.

But could that be about to change? Well, since we are talking about a commodity here, the first thing we need to check is the Dollar Index. A falling dollar is generally good for boosting fund inflows and prices in the commodity sector.

At present, many analysts expect the dollar to remain firm as the Fed continues to hike interest rates in the United States. However, what if the index begins to break down instead?

As you can see below, the index is trending toward another test of the 101 level as critical support. What if that level fails in the weeks to come? Could a falling dollar support higher copper prices?

If the Dollar Index does indeed plunge below 100 in the weeks ahead, look for copper prices to move back above $4 and break out of the current downtrend. When this happens, the weekly chart reveals just how quickly price may begin moving to the upside.

And, finally, why does this matter to silver investors? Because, like copper, silver is also a vital industrial metal and electricity conductor. Additionally, global silver stockpiles are falling, too, as physical demand outstripped physical supply by nearly 240,000,000 ounces in 2023:

You can see the long-term correlation between copper and silver in the charts too. You might note that it appears that silver has a little catching up to do. (Copper in candlesticks, silver displayed as a blue line.)

So keep an eye on the copper price in the back half of this year. If it begins to break out, the impact on all metals, including silver, could be significant.

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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