Base Metals Rally
May 7th, 2009 | By Doug Casey | Category: Gold MarketThe base metals were all solidly in the green on Wednesday. Copper started moving higher early in the pre-dawn hours, and continued the trend pretty much straight through the day, just coming off its intraday highs to finish at $2.1725/lb., up more than 12½ cents.
Nickel was flat until mid-morning, then it too caught fire and shot up to close at its intraday high of $5.7516/lb., up more than 43 cents. Zinc made a strong upmove, ending at $0.713/lb., up nearly 4 cents. Aluminum was solid, adding over a penny and three-quarters, to $0.6926/lb., while lead posted a modest gain to $0.6453/lb., up just under a penny.
Copper led the industrial metals higher, making a powerful move that took it up the most in a month after the better-than-expected jobs data left traders with hope that the economic worst is in the rear-view mirror. It was the metal’s fifth positive session in the past six.
“I think people are feeling pretty confident that the economy is in fact bottoming and we are starting to see the light at the end of the tunnel,” said Matthew Zeman, of LaSalle Futures Group in Chicago.
“It’s just one in a long line of more encouraging economic data that has been coming out in the last couple of weeks,” said Gayle Berry, an analyst at Barclays Capital (NYSE:BCS).
The jobs report notched another positive in a week that has featured less-than-dismal numbers from the service industries in the U.S., manufacturing in China, U.S. construction spending, and the housing market.
Berry added that market participants are coming around to “the view that global output may now be starting to pull itself out of the hole it fell into at the end of last year.”
Oddly on such a strong day, the supply situation failed to be supportive. Copper inventories monitored by the LME were up sharply yesterday, rising by 7,225 metric tons, to 402,150 tons.
That could signal a slowing of the movement of copper from Europe to China, since the price differential has narrowed of late.
“Because the arbitrage halved over the past couple of weeks and physical premiums have come off, maybe we’ll see less European metal going into China,” Berry said. “But [we don’t want] to read too much into one day’s trend.”
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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.