Base Metals Charge Higher
Nov 5th, 2008 | By Doug Casey | Category: Financial NewsThe base metals were all well into positive territory on Tuesday. Copper bottomed just north of $1.75 in the pre-dawn hours, then went near-vertical before leveling off in the late morning to cruise to a finish at $1.9393/lb., up more than 11 cents. Nickel pushed upward for most of the day, regaining the $5 mark and holding to close at its intraday high of $5.40/lb., up 40 cents.
Zinc also was sharply higher, just pulling back a bit late to end at $0.5322/lb., up almost 3 cents. Aluminum followed much the same path, busting to its intraday high of $0.9236/lb., up 2¾ cents, while lead had some brisker ups and downs, eventually adding a penny and a quarter, to $0.6869/lb.
Copper led the charge among the industrial metals yesterday, as the sinking buck and rising price of crude sparked a bit of interest in the commodities as inflation hedges.
“The dollar is selling off today, which is really pumping up all the commodities, and copper is along for that ride,” said Michael Gross, an analyst at OptionSellers.com in Tampa, Florida.
Now, as with other commodities, “The next major event awaiting the markets” is the result of the presidential election, said Edward Meir of MF Global (NYSE:MF).
Gross agreed, arguing that speculation Obama will score a victory over McCain helped send the dollar lower and boosted equity and commodity markets.
“With Obama, there’s this idea that there will be more domestic spending, which may push down the value of the dollar and be good for commodity prices,” he said.
In other words, inflation with a capital I.
But the naysayers are still in the majority, especially as disappointing economic numbers continue to roll in, not only here but abroad. Yesterday, Credit Suisse Group (NYSE:CS) cut its forecast for 2009 global copper demand, citing a slowdown in China’s economic expansion. Consumption is now expected to fall 0.2% next year, vs. an earlier projection of a 1% gain.
Thus, “Even with today’s gains, I can’t see going to major rally phase right now, given the current demand situation,” Gross said.
Source: Base Metals Charge Higher
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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.