Base Metals Sink
Feb 11th, 2009 | By Doug Casey | Category: Financial NewsThe base metals were all red-soaked on Tuesday. Copper fell from the pre-dawn hours to the New York open, rallied back to break-even by late morning, but then slid again to finish at $1.5663/lb., down 4½ cents.
Nickel was down all day, falling back through $5 and closing near its intraday low at $4.8519/lb., down 32 2/3 cents. Zinc was a slow and steady daylong decliner, ending at $0.5151/lb., down more than a penny. Aluminum held up until late morning, but then tumbled to its intraday low of $0.6147/lb., down 2¼ cents, while lead, after a couple of sharp swings up and down, wound up shedding a penny and two-thirds, to $0.5172/lb.
Copper led the industrial metals lower, as traders expressed their low opinion of the stimulus package approved by the Senate.
That led Gijsbert Groenewegen, a fund manager at Gold Arrow Capital Management in New York, to sum up market sentiment: “This is really going to be too little, too late,” he said. “The economy is still going to suffer.”
Frank McGhee, of Integrated Brokerage Services in Chicago, was a shade less pessimistic, describing copper as “in a holding period right now … People are waiting to see that the stimulus plan actually goes forward,” McGhee said.
Meanwhile, those stockpiles just keep on piling up. Copper inventories monitored by the LME shot higher again yesterday, adding 6,650 metric tons, to 514,425 tons.
Underscoring the precarious situation was word that world industrial output fell 5.3% in December, year-over-year, according to BNP Paribas. “The breakdown of global industrial production growth highlights that activity has been underperforming in all the key metals consuming regions,” the bank said.
On the production front, Chile is taking strong steps to help bolster its mining sector. The Mining Ministry announced that the government has boosted by 50% the amount of loans available to small copper miners to shield them from low prices for the metal as a result of the global economic crisis.
The size of the country’s copper price stabilization fund has been raised to around $39 million from $26 million, the Ministry said.
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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.