Base Metals Are Strong
Jun 21st, 2008 | By Doug Casey | Category: Gold MarketThe base metals were mostly in the black on Friday. Copper started up in the pre-dawn hours and kept pushing higher during most of the trading day, finishing barely off its intraday high at $3.8965/lb., up 5 cents.
Nickel had some sharp ups and downs before closing in positive territory at $10.0939/lb., up 8¾ cents. Zinc had a long series of ups and downs before ending where it started at $0.8584/lb., unchanged. Aluminum shot higher during the pre-dawn hours then traded sideways, eventually adding a penny and two-thirds, at $1.3957/lb., while lead finally had a good day, advancing 2¾ cents, to $0.8323/lb.
Copper pushed higher on supply concerns and a declining dollar that makes the metal cheaper for holders of foreign currencies.
Inventories monitored by the LME were down 225 metric tons, to 124,000 tons, yesterday. Stockpiles monitored by the Shanghai Futures Exchange fell by 575 tons, to 33,417 tons, in the week ended Thursday.
The advance came despite reports of the end of strike action at Southern Copper’s Cuajone mine in Moquegua province, Peru.
Edward Meir, of MF Global, sees conflicting tendencies. “Technically,” Meir said, “look for two days of closes above $8,350 a ton to set up an advance to the old highs, but fundamentals argue otherwise, and suggest we are quite overextended here.” Yesterday’s close was $8,388/ton.
Aluminum vaulted to a three-month high on supply concerns. Alcoa said on Thursday it would temporarily idle half the production at its Rockdale, Texas, smelter because of local power supply problems.
Three of the plant’s six operating potlines – which produce about 120,000 tons per year – have been shut down as a result of the electricity supply interruptions.
“The Alcoa news has reminded the market of the highly dependent nature of aluminium supply on both the price and supply of power,” said David Thurtell, analyst at BNP Paribas.
Some are unconvinced by the rally. “We argue that the recent strength in aluminum and copper is unjustified by fundamentals and that investors should not get carried away (or out) and buy these moves,” wrote analyst John Reade. “There will be tactical opportunities to buy both metals this year, but not here.”
Source: Base Metals Are Strong
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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.