Base Metals Participate, Too
Jan 26th, 2009 | By Doug Casey | Category: Financial NewsThe base metals all moved higher on Friday. Copper declined into the New York open, but then soared straight through, finishing at its intraday high of $1.3906/lb., up more than 7½ cents.
Nickel followed a similar path, although it came off its highs late in the day to close at $5.1566/lb., up 27¼ cents. Zinc moved up sharply, ending at $0.5199/lb., up 2 cents. Aluminum was a modest gainer, adding a penny to $0.5981/lb., while lead had a very strong day, adding 3¾ cents, $0.5126/lb.
Copper led the uptrend in the industrial metals, winding up in positive territory for the first time in four sessions. Analysts attributed the rally to supply concerns raised by an earthquake in Chile, the world’s leading producer, that measured 4.9 on the Richter scale.
Most saw it as likely a temporary upturn.
“The earthquake is why copper isn’t down,” said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. “Copper is trying to claw its way uphill. Barring any major supply disruption, it will have a hard time making a big move higher.”
Indeed, the rise in stocks continued unabated. Copper inventories monitored by the LME advanced by another 2,175 metric tons yesterday, to 424,625 tons. That’s enough for a week of global copper demand.
Traders also responded positively to President Obama’s plea to congressional leaders to reach a consensus on an $825 billion stimulus plan. Obama is aiming to get the plan approved by mid-February.
“There is some optimism and some hope that the stimulus plan will take affect soon and help copper demand,” said Donald Selkin, of National Securities Corp. in New York.
However, Selkin was quick to add that, “Users may be looking to buy at these prices to replenish their supply … This is just a bounce within the bearish fundamentals. I don’t see this as the beginning of a bullish move for copper.”
And Citigroup (NYSE:C) analyst Heath Jansen contended that, “We still see significant downside risk to prices and earnings for the sector … Calling the depth and severity of this downturn may be near impossible. Nevertheless historical commodity bear markets have lasted two to three years.”
Source: Base Metals Participate, Too
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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.