Two Charts You Have To See!

| September 9, 2013 | 0 Comments

shipping copperInvestors received some great news out of China this past weekend.   The country’s August merchandise trade surplus grew to $28.5 billion, up from the previous month’s $17.8 billion reading. 

What’s more, Chinese exports grew to 7.2% year-over-year.  That’s much higher than analysts’ consensus estimate of 5.1%.

What’s it mean?

Quiet simply, the Chinese economy may be embarking on another tremendous growth spurt. 

As you may remember, China turned in absolutely phenomenal growth numbers in the mid-2000s.  Yearly GDP growth came in at 10.7% in 2005, 12% in 2006, and 13.6% in 2007.

But since the US financial crisis hit in 2008, it’s been tough sledding for China.  GDP quickly dropped to 8.7% in 2009 and slowly eroded to 7.2% by 2012.  China’s growth projections have been so shaky in 2013 that many investors are calling for an economic crash similar to the one seen here in the US.

Of course, all this uncertainty surrounding the Chinese economy has been tough on the copper market… 

The red metal has taken a beating thus far in 2013 thanks to Chinese growth slow down fears.  While it’s up solidly since the late July lows, it’s still down 10.2% from where it started the year.

Take a look…


As you can see, copper bounced nicely from the $3.00 a pound area set in late July. 

But now that China’s trade balance numbers are showing strong improvement, there’s likely more upside for copper in coming months.

And that’s not the only bullish commodity news hitting the headlines…

The Baltic Dry Index (BDI) is making another dramatic leap higher in recent trading.  As you may remember, the BDI is a measure of the cost to rent large, ocean-bound bulk ships.  The last time I showed you a chart of the BDI in early July it was trading at 1,179.

Take a look at it now…

Baltic Dry Index

As you can see, the cost to move goods across the world’s oceans is surging.  Since mid-August, the BDI has jumped 40%.  This is not only very good news for the global economy, but it’s excellent news for commodity investors.

So if you’re still on the fence about where commodities are headed as 2013 winds down- don’t be.

This weekend’s strong Chinese trade numbers along with a dramatic spike in the BDI are very good signs for the global economy.  As a result, commodity demand will likely remain strong for some time to come.

For more insight and analysis on the commodity markets, stick with Commodity Trading Research!

Until Next Time,

Justin Bennett

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Category: Commodity Trading, Copper

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.