Base Metals in a Funk Again
Aug 23rd, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals were all well into the red on Friday. Copper was off steeply in the pre-dawn hours, leveled off, but then caught another downdraught late in the day and finished just off its intraday low at $3.517/lb., down 6¾ cents.
Nickel was up at the New York open, but also fell off in the late morning, to close at $9.375/lb., down 15 2/3 cents. Zinc was all over the map, but ended on a down note at $0.8116/lb. down more than a penny and three-quarters. Aluminum sagged through the whole day, shedding 2¾ cents, to $1.2379/lb., while lead also sold off, dropping a penny and two-thirds, to $0.8579/lb.
Copper, which has been more closely tracking the dollar in recent days, sank on the buck’s renewed vigor. Its first weekly gain in the past eight was trimmed as a result.
Rising stockpiles also played in. Inventories monitored by the LME have doubled since June, including a jump of 7,275 metric tons to 163,800 tons yesterday, their highest level in six months. U.S. stocks are also up, by 67%.
A slackening oil price led Frank McGhee, of Integrated Brokerage Services in Chicago to comment of the industrial metals that, “We’re just living on the back of crude right now. The euro and the crude are working hand-in-hand with each other, and we are predominantly following.”
Chinese demand is seen as being iffy at the moment. It showed little life in July, rising just 2% from June, while year-to-date growth of only 5.8% is well below expectations from the start of the year. Those hoping for a big bump after the Olympics may not get it.
In company news, the board at Norilsk, the world’s leading nickel miner, voted yesterday to spend up to US$2 billion buying back 4% of its stock. Norilsk’s share price has fallen by a third since May, but the company is willing to pay a 27% premium to its Friday close in the buyback.
The move is opposed by UC Rusal, which owns a quarter of Norilsk and has been involved in a struggle to gain a greater say in the company’s affairs.
And the Indonesian government says it will cap the production of several key minerals, especially tin, in an effort to put a floor under prices. The cap also includes copper, gold, nickel and iron.
Source: Base Metals in a Funk Again
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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.