Base Metals All In The Green
Jun 2nd, 2009 | By Doug Casey | Category: Gold MarketThe base metals were all gushing green on Monday. Copper had another strong day, pushing steadily higher from the pre-dawn hours through the day and finishing at its intraday high of $2.2858/lb., up 12 2/3 cents.
Nickel also moved strongly higher, closing just off its intraday high at $6.5559/lb., up 32¾ cents. Zinc was a solid gainer, ending at $0.71/lb., up 2¾ cents. Aluminum was higher, tacking on 2¼ cents, to $0.658/lb., while lead soared, adding 4 1/3 cents, to $0.748/lb.
Copper led the industrials stoutly higher for the third day in a row, and began June in fine fashion, jumping to a seven-month high as traders responded to the declining dollar and some encouraging news out of China.
China’s official Purchasing Managers’ Index came in at 53.1 for May. It was the third straight reading of more than 50, which indicates expansion, the Federation of Logistics and Purchasing said yesterday.
“The Chinese data, on the surface, indicate the stimulus package, which includes fiscal and bank lending, has an effect in stimulating the economy,” said James Parsons, a portfolio manager at London-based BlueCrest Capital Ltd., which manages about $12 billion. “The question is, how sustainable that is.”
That seems reasonably cautious. But the three banner days for the base metals have other analysts exhibiting what might easily be called irrational exuberance.
“People are really pouring into copper and the commodities overall right now on the dollar weakness and the thinking that there is an end in sight for the recession,” said Matthew Zeman, of LaSalle Futures Group in Chicago. “A lot of these commodities can go a lot higher from here.”
Interestingly, the stockpile data were not as striking as usual. Copper inventories monitored by the LME did decline yesterday, but only by 300 metric tons, to 311,975 tons. That’s well below the freefall of recent weeks.
Among other developments, there has been considerable short covering of late. Hedge-fund managers and other large speculators reduced their net-short positions by 5.8% in New York copper futures in the week ended May 26, according to the Commodity Futures Trading Commission. And the Reuters/Jefferies CRB Index of 19 raw materials finished May up 14%, the biggest monthly gain since July 1974.
Source: Base Metals All In The Green
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.