Base Metals Slump
Jul 30th, 2008 | By Doug Casey | Category: Financial News, Gold MarketIt was a decidedly poor day for the base metals Tuesday as copper, zinc, nickel, aluminum, and lead all fell, reversing yesterday’s solid gains. Copper was flat in early trading, but ran into a determined sell-off in the pre-dawn hours. While the metal managed a slight recovery, it still finished the day down almost 4 cents, at $3.6894/lb.
Zinc dropped steadily throughout the morning, stabilizing around noon to close at $0.8335/lb. down 2 ½ cents. Nickel followed a similar trading pattern to copper, rising in the early morning before sliding for the rest of the day. The metal ended down over 2 ½ cents on the day, at $8.1337/lb. Aluminum also fell steadily throughout trading on Tuesday, closing at $1.3227, down 2 ¼ cents. Lead, while the least affected by the day’s losses, still finished down ¼ cent, at $1.0160/lb.
Copper’s losses were fueled by a variety of economic indicators that all pointed to a slowing economy, leading many to believe that demand for copper will reduce demand for the metal, which is commonly used in the pipes and wires of new houses.
A retail sales index in the U.K. reported its lowest number in 25 years, while unemployment levels in Japan rose to their highest numbers in 2 years. Meanwhile, a report Monday from the IMF stated that there is no immediately foreseeable end to the housing crisis in the U.S.
“There is a poor outlook for demand, especially with the continued bearish outlook for housing,” remarked Michael Gross of OptionsSellers. “Prices could continue to fall.”
Matthew Zeman of LaSalle Futures Group agreed, stating that “I don’t think it will be possible to fuel any sustainable rally based on the current fundamentals.”
Source: Base Metals Slump
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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.