Nickel sagged from the pre-dawn hours all the way through, closing at its intraday low of $4.3681/lb., down 8 cents. Zinc was in the green until the noon hour, but then it too sold off, ending at its intraday low of $0.525/lb., down nearly a penny. Aluminum had another weak day, shedding a penny and a half to $0.7575/lb., while lead gave up just over a penny, to $0.4837/lb.

Copper was off, albeit perhaps not as much as might have been expected considering the selloffs in other markets, as well as the gloomy news that keeps piling up.

In addition to the grim purchasing managers’ indexes from the US, Europe, Russia, China and South Africa, India’s exports in October fell for the first time in seven years. And economists at JPMorgan Chase estimate that industrial production will decline in developed markets this quarter by the most since 1980.

Perhaps adding a little support to the red metal, and about the only bright spot to be found, was a modest stockpile decline, as inventories monitored by the LME fell 450 metric tons yesterday, to 291,200 tons. Inventories remain nearly 50% higher than September levels, and at their highest since January 2004.

Even as Barclays Capital in London was writing that, “Very weak Chinese and Indian manufacturing data bodes ill for metal consumption,” the governments of those countries were making moves designed to help. Both China and India lifted some price controls yesterday, in a desperate effort to sustain their recent powerful growth trend.

China’s Yunnan province also moved to support prices by purchasing 1 million metric tons of base metals, including 150,000 tons of copper, but to little avail.

Aluminum fell to a 3-year low as LME inventories shot up another 20,850 metric tons, to 1.82 million tons. That brings this year’s stockpile gains to 96%.

In company news, Norilsk Nickel, the world’s top producer of nickel and palladium, said it will cut output of the metals, as well as platinum. Nickel output is expected to fall to 298,000 metric tons this year from 300-305,000 tons, palladium output to 2.764 million ounces from 3.00-3.05 million ounces, and platinum output to 625,000 ounces from 710-720,000.

Output will drop again next year, and capex will be off 34% this year and a projected 48% in 2009.

Source: Base Metals Goin’ Nowhere

Once again, I’m drawn to palladium.

We first took a look at palladium back in May, when the metal was at $425 per ounce. It rallied as high as $475. And the two stocks I highlighted in my article scored big gains in the days that followed.

Today, palladium is tracing out a horizontal rectangle pattern, similar to what we’ve seen in gold and silver. If it breaks out of this pattern, then palladium could run as high as $525 per ounce.

Here’s the chart…

The biggest gains, however, will once again come in the shares of North American Palladium (PAL) and Stillwater Mining (SWC) – North America’s two largest palladium-mining companies.

Mining stocks are a proxy for the underlying metal. So just as gold stocks rise when gold goes up, and silver stocks rally when silver rallies, palladium stocks climb when palladium moves higher.

But the percentage gains in the stocks are usually much larger than the gains in the metals. Mining companies are sitting on large reserves of gold, silver, or palladium. So a small increase in the price of the metals creates a large windfall for the companies, and an even bigger windfall for investors.

Gold and silver started a renewed up-leg last week. Palladium looks ready to follow in their footsteps. If it does, then shares of PAL and SWC might make for a good speculative trade.

Source: These Two Precious-Metal Stocks Are Ready to Bolt Higher