Base Metals Gain
Feb 25th, 2009 | By Doug Casey | Category: Financial NewsExcept for lead, the base metals were all higher on Tuesday. Copper jumped more than 4 cents from yesterday’s close to $1.4872/lb. Nickel tacked on just under 14 cents to finish at $4.3522/lb. Zinc was little changed, ending at $0.4868/lb. Aluminum rose by almost 2 pennies, closing at $0.5848/lb., while lead sank to $0.4530/lb., down one-third of a cent.
Copper had its biggest gain since Feb. 3 in New York as a rebound in U.S. equity indexes revived optimism for metals demand.
Copper has added 6.4% so far in 2009 based on speculation that government spending will loosen knotted credit markets and boost the economy. “Copper is trading solely on the stock market today,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said after S&P 500 futures climbed as much as 1.4 percent. “The next wave in copper will depend on equities.”
The global economic slump and rising metal supplies mean that copper prices may continue to fall this year, UBS AG (NYSE:UBS) analysts led by Daniel Brebner in London said yesterday in a report e-mailed today. “We do not think copper prices have bottomed,” Brebner said. The recent rally “is not sustainable.”
Inventories of the metal monitored by the London Metal Exchange, which have surged 61% percent this year, rose 0.4% Tuesday to 546,600 metric tons, the highest since October 2003.
Brebner said that trend will continue. Supplies in LME warehouses are “likely to rise to over 1 million tons,” UBS forecast. “This would imply copper prices of between 85 cents and $1.30 a pound.” Still, it may be “unrealistic” to forecast copper prices of less than $1 because producers face higher costs than during previous downturns, Brebner said.
UBS expects the metal to average $1.30 this year. Copper for delivery in three months rose $54, or 1.7 percent, to $3,285 a metric ton ($1.49 a pound) in London. The price reached a record $8,940 on July 2.
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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.