More Bloodletting in Base Metals
Oct 17th, 2008 | By Doug Casey | Category: Financial NewsThe base metals were mostly bloodied again on Thursday. Copper rallied during the pre-dawn hours, but failed to hold its gains as it was off steeply beginning with the New York open, and finished just off its intraday low at $2.1153/lb., down nearly 10¼ cents.
Nickel plunged at the NY open, falling well below the $5 mark, and even a late day rally left it still short of that level, at $4.8844/lb., down almost 25 cents. Zinc was off from the pre-dawn hours to mid-morning, then pushed slightly higher to close at $0.5253/lb., down 4½ cents. Aluminum bucked the trend by moving slowly higher through the day, ending at $0.9675/lb., up better than a penny and a half, while lead took a beating, shedding nearly 6 cents cents, to $0.6163/lb.
Copper dropped to its low point since January 2006, as uncertainties about the economic future once again dominated trading.
There’s not much optimism to be found anywhere regarding the future.
“Going forward, I’m looking for further weakness in the industrial metals,” said Zachary Oxman, senior trader with Wisdom Financial in Newport Beach, California. “There’s a lot of demand destruction in commodities right now.”
Oxman went on to deliver his opinion that there’s more at work, too: “I think what you’re seeing is these hedge funds going out there and demanding liquidity. It’s a liquidity crisis and, as such, you’re going to see selling in assets that really don’t make sense to meet margin calls, or to stay afloat and get into cash.”
“All the data is pretty bearish. The industrial production was for September, so you can expect that we are yet to see the big fallout from the last month in particular,” said David Thurtell of Citigroup. And, “The Philly Fed data was shocking,” he added
Those hoping for China to pick up the slack may be disappointed. China’s industrial output in the first nine months slowed compared with the figure through August.
Whereas the country’s output rose 15.7% through August, that number drops to 15.2% when September is added in, the China Electricity Council said yesterday.
In a report out of Chile, workers ended a 36-hour strike on Thursday at the country’s top mining port, Antofagasta, allowing exports to resume before the flow of copper was much affected.
Source: More bloodletting in base metals – Only aluminum ekes out a gain.
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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.