Base Metals All in the Tank Again
May 9th, 2008 | By Doug Casey | Category: Gold MarketThe base metals were all in the red on Thursday. Copper backed down for a second straight day, dropping from the pre-dawn hours to late morning, after which it recovered slightly to finish at $3.844/lb., down 4¾ cents.
Nickel hit the skids, falling throughout the day and closing at $12.3362/lb., down more than 48½ cents. Zinc dropped back below $1, ending at $0.9901/lb., down nearly two cents. Aluminum was weak, shedding better than a penny and three-quarters, to $1.2821/lb., while lead tumbled off a cliff in the late morning, plunging to its intraday low of $1.0486/lb., down 4 1/3 cents.
Whatever expectations of economic turnaround may have been generated by the Fed’s most recent rate cut seem to have evaporated from the industrial metals market, at least for the time being. The bears are fully in charge right now.
“Metals seem to be caught among various crosscurrents for the moment, but having moved up so quickly when the dollar was weakening, a re-surging greenback seems to be working its magic in reverse,” said Ed Meir, of MF Global.
The metals took their cue from the buck’s morning strength, rather than the weakening in the afternoon hours. Chinese buyers also appear to be sitting on the sidelines for a while, hoping to help drive prices lower before jumping back in.
But conflicting factors remain.
“The internal fundamentals for copper and a number of the metals remain bullish, but not bullish enough at present to counter the selling as commodity trades are closed as hedges against dollar weakness are unwound,” said William Adams, an analyst at BaseMetals.com.
Supply problems are still out there, even after this week’s settlement of the copper strike at Chile’s Codelco mines.
In the offing are more potential walkouts. Next up, Peru, where union workers at mines throughout the country are ready to strike next week to demand better labor benefits.
“We have 33 unions supporting us,” said Luis Castillo, leader of Peru’s biggest mining union federation. “We will go on nationwide strike on May 12 no matter what.”
Peru is the world’s leading silver producer, ranks second in copper and zinc, and fifth in gold.
Advertisement
Looking to invest in precious metals? Look no further than the Metals Select Account (not FDIC-insured) from EverBank®. It delivers everything you've been searching for—lower costs, ultimate convenience, and flexible options.
Whether you want coins, bars or pooled metal by the ounce, at EverBank, you can generally trade within 1% of the current spot market price. And account minimums are only $5,000 for Pooled accounts and $7,500 for Holding.
And with full online access to your metals account with the award-winning EverBank Online Financial Center, you'll never be too far away from your metals investment with access to your account when you need it. Plus you'll receive monthly account statements showing your allocations.
Get the metals you need, with the account benefits you've been wanting. Apply today
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.