Base Metals Massacred, Traders Flee En Masse
Sep 30th, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals all took a major shellacking on Monday. Copper declined from the pre-dawn hours straight through the New York day, finishing at its intraday low of $2.8879/lb., down 20¾ cents.
Nickel traded lower early, then sideways until just before noon, after which it cratered, falling to its intraday low of $7.2053/lb., down 34¾ cents. Zinc rallied once in the pre-dawn hours and again up to late morning, but then slumped to $0.7444/lb., down nearly 4½ cents. Aluminum followed copper straight down, ending at $1.0717/lb., down 3¾ cents, while lead did the same, dropping to its intraday low of $0.7959/lb., down 8 2/3 cents.
Copper led the other metals down, as it tumbled to a nine-month low after the rejection of the bailout plan suggested that it may not be possible to head off recession, and with it a big demand decline.
Everyone, but everyone, apparently headed hastily for the exits.
“I think you’re seeing some … long liquidation and some fresh fund selling in here,” said Michael Gross, futures analyst with Optionsellers.com in Tampa, Florida.
“Although the jury is still out as to whether the bailout package will work, there is much less debate about the fact that the macro stats coming out of the U.S. and the rest of the world continue to look very bleak,” said Edward Meir of MF Global.
“That is why this week’s U.S. numbers are important, as they will give us a better idea of how quickly the economy is resuming its downward slide,” he added.
Under the circumstances, it’s no wonder that many eyes are looking east for some small ray of hope.
“It is now up to the Chinese, and it depends on how badly their economy has been impacted by this downturn,” said Leon Westgate at Standard Bank.”
And elsewhere, Citigroup (C) really took the scalpel to nickel, slashing its 2009 nickel price forecast from $10 to $6/pound. Citi predicted that new mines will open even as demand from stainless steelmakers drops, leading to a global surplus that will widen by almost five times in the next two years.
Source: Base Metals Massacred, Traders Flee En Masse
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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.