Not too much to say about our markets last week, other than platinum and palladium were beaten up pretty good, while crude oil continues moving higher. So let’s talk about something else.
Take a look at the chart in this post. It is the monthly average of Spot Copper as compared to the prime lending rate going back to 1970. A Ph.D. Thesis could be written about this chart, and a few books to boot.
But here we will just make a few comments from the 30,000-foot level. On that monthly average basis, the prime lending rate was 21.5% in Dec. 1980, a pretty lofty number in comparison to the cost of money today at 3.5%. As an aside, housing starts stood at a seasonally adjusted annual rate of 1.48 million in Dec. 1980, considerably higher than the 1.047 million rate recently reported for Sept. 2016.
Interesting, eh? In any event, the point here is that the cost of borrowing was in a downtrend for about 30 years through 2009, and flat through 2015, with we believe, a change in trend now underway. This is not to suggest we are on the verge of significantly higher rates, but it does look to us like the pendulum has begun to swing the other way.
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