Research Excerpts

Smart Money Making A Huge Bet On Copper

Posted on: Monday, July 15th, 2013

The following (green highlights) is an excerpt and chart from our July 12th Investor Sentiment Survey report (access requires subscription, click here to view a sample report).

Investor Sentiment Survey, one of 8 different reports that we produce for subscribers throughout the month, is a monthly report that displays and analyzes a broad list of both asset flow- and survey-based measures of both professional and retail investor sentiment and discusses their directional implications for the major areas of the US financial markets.

Excerpt From: Investor Sentiment Survey
Asset Class: Commodities
Topic: Copper Prices
Date: July 12th, 2013

Chart 2 measures investor sentiment in copper prices according to the positioning of Commercial Hedgers in the COMEX copper contract, which are defined by the Commodity Futures Trading Commission (CFTC) as those holding 100 or more contracts that are “…engaged in business activities hedged by the use of the futures or option markets”.

The red line in the upper panel chart plots the weekly net position of these Commercial Hedgers since 2002, with a corresponding weekly chart of the copper contract in the lower panel.

 COMEX Copper & Commercial Net Long Position

COMEX Copper & Commercial Net Long Position

The rightmost green ellipse in the upper edge of the chart points out that the Commercials were net long 39,801 contracts at the end of June, which is their largest collective net long position for copper in the 30-year history of the contract.

The other green highlights show that lesser net long extremes, of around 24,000 contracts, have closely led what have been the 4 most important bottoms in copper prices during the past decade.  Accordingly, this metric suggests that economically-sensitive copper prices are either at or near another similarly important bottom now.


Copper prices are universally seen as a global economic barometer and, at least up until recently, have maintained a statistically significant and dependable 25 year positive correlation with the Dow Jones Transportation Index (DJT).

Thus, we view the current positioning by these Commercial Hedgers as an aggressive bet by the “smart money” on an upcoming intermediate to long period of global economic growth.

Asbury Research subscribers can view the entire 12 page report, which also includes our analysis of the latest investor sentiment data pertaining to the US stock market, US interest rates, and the US Dollar, by visiting our Research Center.