Base Metals React Little to the Rate Cut
May 1st, 2008 | By Doug Casey | Category: Gold MarketThe base metals were mixed on Wednesday. Copper bottomed in the pre-dawn hours, then was up through most of the day, finishing at $3.9472/lb., up almost 2¼ cents.
Nickel blasted back over $13.10 in the late morning, but then fell sharply to close at $12.8374/lb., down almost 5 cents. Zinc was up and down with little change, ending at $1.0024/lb., down less than a quarter of a cent. Aluminum sagged to $1.307/lb., down 1 2/3 cents, while lead was marginally higher at $1.2228/lb., up two-tenths of a cent.
The Fed’s action had little effect on the industrial metals, with copper rising slightly on what analysts tabbed as primarily short covering.
Volume was light, as most of the trading came before the Fed weighed in.
Also factoring in was the slight rise in GDP, as expected, with speculators hoping that that signals a rise in future demand.
The strike against state-owned Codelco in Chile continued, but even down there, “All eyes are on the Fed,” said Bart Melek, global commodity strategist with BMO Capital Markets.
Melek went on to say that strike participants were mostly “keeping their powder dry” ahead of the interest rate announcement.
Supply data came in slightly bearish yesterday. Inventories monitored by the LME rose 875 metric tons, to 110,525 tons.
Had the Fed’s rhetoric indicated a more hawkish stance on inflation is coming down the road, “we wouldn’t be surprised to see a bit of a correction here in copper,” said Michael Gross, of OptionSellers.com. Gross added that over the next month the metal could pull back to the $3 to $3.25 range.
But with no clear signal given, prices are likely to “continue to move sideways” within a $3.85 to just over $4 range, said Eric Wittenauer, analyst with Wachovia Securities.
In company news, Grupo Mexico said on Monday that its plans to ramp up output at its giant Cananea copper pit have been delayed indefinitely after a labor board declared a 9-month-long strike there legal.
Grupo Mexico hoped to have significant production by May but plans were stifled by new worker blockades this month. “At this point, we are unable to provide a revised copper production guidance for the remainder of the year and the date at which we will resume operations is not currently foreseeable,” said CFO Daniel Muniz.
Advertisement
This is a rather unusual story…
Recently a team of Harvard and MIT researchers made a scientific breakthrough that has unlocked the "predictability" of exotic investments. In fact, using just a few proprietary "trigger" signals… 84 "Big Game Hunters" had the opportunity to experience what most Americans never will - $232,500 in just 71 days.
While these kinds of profit opportunities fly well outside of most people's "comfort zone"… those who consider themselves "Big Game Hunters" should absolutely consider implementing this methodology for themselves.
Read on to discover every detail of this phenomenon.
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.