Base Metals Mostly Higher
May 7th, 2008 | By Doug Casey | Category: Gold MarketThe base metals were mostly in positive territory on Tuesday. Copper revved up after the LME holiday, meandering up and down through about a 4-cent range yesterday, before settling with a nice gain at $3.9316/lb., up nearly 6 cents from Friday.
Nickel also rallied, turning in a solid day to close at $12.8767/lb., up nearly 15½ cents. Zinc muscled its way back over the $1 mark, finishing at $1.0157/lb., up 3 1/3 cents. Aluminum had a decent day, adding just under 2 cents to $1.3187/lb., while lead bucked the positive trend by dropping a penny, to $1.149/lb.
Buyers were out in force yesterday, despite a drop in supply worries.
“The base and precious metals are rebounding strongly … buoyed by a combination of a down turn in the value of the dollar and a sharp move higher in crude …,” said JP Morgan analyst Michael Jansen. “This has pushed copper up towards the $8,520/mt area, which is a little surprising in light of the end of the Codelco subcontractors strike, and might indeed reflect some of the price action on Monday in New York when Comex was sharply higher, up around 11 percent at one stage.”
The settlement in Chile was the day’s biggest consideration. The country’s state-owned copper miner, Codelco, said that employees of contractors have voted to end their 3-week strike. Andina and El Teniente, Codelco’s second biggest project, have been re-opened.
The last remaining shuttered mine, El Salvador, is due to come back on line later this week.
Strike’s end left more than a few analysts scratching their heads. “The strike was the main support to copper prices and everyone expected prices would come down after it ended,” said Catherine Virga, of CPM Group in New York. “Now that this short-term supply shock has been taken out, people have to reevaluate their outlook for the market,” she offered.
Virga was among those still unable to explain Monday’s sudden huge jump, and equally quick fall, in the copper price.
Noting that neither London nor Shanghai had anything similar today, “it signals that yesterday’s move was only something that happened with a few traders in New York,” she said, adding that, “I can’t imagine what would have driven prices up that high.”
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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.