Friday, January 25, 2013

Copper, Gold and Silver Price Changes after Quantitative Easing Announcements

Following a post of ZeroHedge ("Spot the Odd One Out") we were curious to see how copper price reacted to the various QE announcements in the last couple of years. The complement the picture we also looked at gold and silver.

Price data we have downlaoded from Wikiposit (front contracts): Copper, Gold and Silver.

According to our count we have five FOMC announcement with QE characteristics:
  1. November 25, 2008
  2. March 18, 2009
  3. November 3, 2010
  4. September 13, 2012
  5. December 12, 2012
In order to capture the entire price change due to the announcement we have looking at the closing prices at the day before the announcement (t-1) and after the announcement (t+1) and obtained the following results:

Data is here.

Thursday, January 10, 2013

Update on Analysis Program

We have now had the pleasure to blog for one full year and would like to recapitulate our most successful posts in the three categories Copper, Chile and General Interest:

3. Relationship between Copper Price and Copper Production / Consumption
4. Copper Substitution by Aluminium
6. Top Copper Producing Countries
9. Copper Price Forecasting
10. Relationship between Copper and Chilean Peso Series (1 of 3) (2 of 3) (3 of 3)
12. Peak Copper
        Copper Volume Forecasting
        Relative Conductivity of Ag, Al, Au and Cu
        Copper to Aluminium Price Ratio
        Copper Use in Energy Generation
        Relationship between Copper Price Change and S&P 500 Total Return
        Copper Inventories with Producers

7. Voter Turnout Chile 1870 to 2012
10. Relationship between Copper and Chilean Peso Series (1 of 3) (2 of 3) (3 of 3)
        Chile's Export Destination and Products
        Chile's Population (2012 Census)

General Interest:
1. World Population, GDP and GDP per Capita Growth 1820-2020
2. GDP per Capita Time Series for Spanish Speaking Countries
5. Peak Lithium
8. GDP Per Capita Time Series 1820-2008 (Western Europe)
11. Luxury Car Ownership per Capita Series (1 of 2) (2 of 2)
        World Population Data 1820-2008
        Earliest National Day Celebration Events

For 2013 we plan to keep the number of monthly posts at two, more or less equally distributed between the three topics of Copper, Chile and General Interest. We are also happy to include topics suggested by our readers (please use comments).

For the more successful posts and where appropriate we will do updates including the data which will have become available in the course of 2013. We will also try to address the questions which remained unanswered from our initial analysis program:

Have copper prices actually been a good indicator of turning points in the global economy? Do do so we will assess historical time series of world GDP (possibly also US, China and Chile), copper production volume and copper price. We will also look at the question whether copper prices are early, concurrent and lagging indicators and address the question whether the relationship (provided we find one) has changed over time.
What developments will challenge or strengthen the predictive power of copper prices? We name just a few which we aim to discuss in much more detail:
  • Monetization and off exchange warehouse storage, i.e. dark inventory (for wealth preservation and finance / securitization purposes)
  • Increasing recycling rates (copper doesn't degrade and the copper reservoir is significant)
  • Peak copper (lower production and lower grades) compensated by increased copper usage
  • More efficient design specifications lowering copper content