Base Metals Rally Sharply
Oct 14th, 2008 | By Doug Casey | Category: Financial NewsThe base metals were all well into positive territory on Monday. Copper rose from the pre-dawn hours straight through the day, finishing at its intraday high of $2.3724/lb., up better than 18 cents from Friday.
Nickel soared to about mid-morning and, though it eased off from there, still managed a solid positive close at $5.5618/lb., up 38¾ cents. Zinc followed nickel to a mid-morning peak, but it too backed off to end at $0.6494/lb., up more than 2 cents. Aluminum hit its high in the pre-dawn hours, before falling and then trading sideways in New York for a gain of 2 cents, to $1.0046/lb., while lead had a strong, mostly upward day, adding 4 cents, to $0.6951/lb.
Copper rallied to its biggest daily gain in two years, as traders bet on hopes that world financial cooperation will help to forestall a global recession.
“A degree of immediate relief in financial markets has led to base metals firming across the board, particularly in copper,” wrote analysts at Barclays Capital in London.
The big equities rebound helped, as well
“Copper has been mimicking the moves in the stock market,” said Michael Gross, of OptionSellers.com in Tampa, Florida. “They will probably continue to trade pretty close together for the next several sessions as people try and figure out if the government actions will have an impact on improving the economy.”
The metal was also buoyed when Chile’s Escondida, the world’s biggest copper mine, said on Friday that it is being forced to declare force majeure on some of its deliveries. Escondida will be unable to meet some contract obligations for copper concentrates after the shutdown of a mill used to pulverize rock.
“The Escondida news is very, very bullish,” said Dan Smith, analyst at Standard Chartered. “On its own [the mine] accounts for 8 percent of global supply.”
Meanwhile, aluminum smelters are in trouble. “Ninety-three percent of all the smelter capacity in the world is losing money with prices at around $2,200 per tonne,” says Jim Southwood, president of CRU Price Risk Management, said. “We have just reached to that level where there is significant pain for producers.”
Source: Base Metals Rally Sharply
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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.