The Washington times., 1931-02-16
COPPER PRICES
SEEN HEADED
FOR RALLY
Developments in Red Metal
Are Believed Indicative of
Markets Future Trend
BY LEWIS HANEY
Director New York University Bureau
Of Business Research and Former
Economist of Federal Trade
Commission

Developments in the copper in
duStry are often barometric as
to the general business situation.
Just as this is an age of elec-
tricity, so it is an age of copper.
The two go together.
More than that, we find that
copper prices and other statistics
of the industry practically al
ways behave just about the same
in business cycles. This may be
due to the fact that the human
nature of copper magnates re- !,
mains the same. Whatever the
reason, it enables us to tell where
we are in the business cycle.
Runaway Precedes Peak
For example, one reason why
I was bearish in the spring Of
1929 was that we always find a
runaway copper market preced-
ing a peak in the stock market.
We all remember how in March,
1929, copper scared to 24c q
pound. 1t did much the same
thing in 1907 and 1919.
Then stocks of copper began to
accumulate abnOrmally, and the
price dropped back to 18 cents,
where it was held for months.
That, too, is the usual per-
fOrmance. 1t did exactly the
same thing at the end of 1919.
But that was not enough. Pro-
duction of copper was kept large
and stocks of the metal continued
to accumulate. Finally, as busi-
ness recession set in, the stocks
became so excessive that copper
prices broke sharply and fell to
bottom levels.
Usually, the price falls to be-
tween II cents and IL cents, but
this time the bottom was ga
cents.
Now comes the most interesting
part of the story. Almost always,
after hitting a primary bottom"
copper prices rebound a few cents
and then fell back in a Second
ary" reaction. And the bottom Of
the secondary reaction generally
marks the bottom Of the general
business recession. "
In 1921, for example. the
monthly average price of copper
hit IL cents in March. It re-
bounded to about 1913 cents in
May. And then it fell back to
about 11A cents in August. e..
Up and Down Movement
So now, after falling to 9R
cents in October, the price snap
ped back to an average of 1903
cents for December. Then last
month, it reacted to an average of
9.8 cents and actually touched 91a
cents again.
AS usual, too, stocks of copper
in producers hands, have begun
to decline. They did in May, 1921,
Now they have declined in Decem-
Der, 1880, and January, 1881. This
Indicates that the price has fal-
len low enough to shut off pro-
duction and at the same time to
maintain the demand.
Sometimes the secondary" bot
tom of copper prices is a little
lower than the primary bottom,
sometimes about the same. Al
ready copper has touched the
preceding low of 91ac. I am in
clined to think that represents
rock bottom this time.
Bottom Has Been Hit
Taken alone, the copper barom-
eter, judged by the action of the
stocks of the metal and it's price,
would indicate that business is
very near bottom. It suggests
that we may soon be turning the
corner. The present situation,
both in copper and steel, closely
resembles conditions found about
May, 1921. (The stock market hit
bottom in August, 1929
Such indications are distinctly
encouraging. While I think busi.
ness conditions are in some re-
spects worse than in 1921, and
that it will take several months
yet to get things we'll Strengthened
out, it can be said that signs have
appeared that certain basic in.
duStries are humping bottom.
Even the kiddios epiov Iivfuv In =