Base Metals in the Red
May 12th, 2009 | By Doug Casey | Category: Gold MarketThe base metals were all a bit red on Monday. Copper fell from the pre-dawn hours to mid-morning, bottoming at $2.04 before inching its way back through the rest of the day to finish at $2.0629/lb., down more than 6½ cents.
Nickel had a day of sharp ups and downs to little ultimate effect, closing at $5.8241/lb., down just over 3 cents. Zinc was down big during the pre-dawn hours and didn’t get enough back in New York to make the green, ending at $0.6873/lb., down a penny and a half. Aluminum was little changed, shedding a third of a cent, to $0.68/lb., while lead fell sharply, rose all the way back to break-even, then eased late, dropping a quarter-cent, to $0.6479/lb.
Copper led the industrial metals lower, as traders responded to sinking equities markets and chose to book some profits after recent gains, but the fact that it held well above the $2 mark was a positive for some.
It’s “Just solely tracking equities. It’s a tick-for-tick expectation,” said Frank McGhee, of Integrated Brokerage Services in Chicago.
Yet, while fundamentalists may have been stock watching, the technicians were also persuaded to sell after copper failed to take out the 200-day moving average.
And China factored in, as demand from the world’s biggest user may be easing. Analysts noted that inventories monitored by the Shanghai Futures Exchange jumped 45% last week, the most since February.
Copper lost “momentum as arriving inventory eases” tight supplies, wrote Alex Heath, of RBC Capital Markets in London. But he added that, “The change in sentiment also has much to do with China’s new bank lending easing.” New lending fell in April.
“People are questioning Chinese demand and whether it is sustainable,” said Donald Selkin, the chief market strategist at National Securities Corp. in New York.
And also yesterday, Beijing Antaike Development, the state-run nonferrous metals information provider, said that China’s State Reserve Bureau plans to purchase 400,000 metric tons of lead and zinc in the next three years to keep in line with the Chinese government’s metals revitalization plans to control supplies.
Source: Base Metals in the Red
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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.