Just checked the Kitco Base Metals site, looked at the charts for the non-ferrous metals. All of them look like they're putting in a bottom, building a nice long base. Not quite time yet, but looks like it will be soon, for some action to resume here. Read a story in the Financial Times a week or two ago about some big London commodities hedgie being taken out on his shield, complaining that not only were the prices low, volatility was too. That got my attention, as low volatility is a sign of low attention and low expectations. Been watching the commodities since.
It'll be interesting to see how steel, copper, lead, aluminum are priced if a crash in gold occurs. Metals have no chance of price increases in light of deflation....which has not yet been eliminated as a possibility for 2014.
Amazing that copper is not down more than a penny or so in light of the swooning equity markets and news that China is not doing that well relative to expectations. And why is copper holding up ? Once again, same-old, same-old.... low stock levels on the LME: 328,375 tons That's really low. Gold is up and the USD is down...and that supports copper prices as well.
Copper futures on the CME now down 4 cents across all contracts..... Here is the reason: http://www.marketwatch.com/story/china-factory-data-show-contraction-stocks-drop-2014-01-22
Drip, drip, drip downward we go. March contract now down to $3.20. I am amazed copper is still above $3.00 given the latest developments in China and emerging markets. Who is holding it up ?
Relatively low immediate physical available for supply is preventing a major drop, but there is significant forward supply capability in the medium term (2-3 months). It'll shift to over-supply just as soon as the large players are hedged. You'll need to pack a parachute.
Nothing has changed for me in these two markets, still rolling over, doing spreads. Charts say for short term selling puts in Copper.
It's been a strange-at-best market. With the emerging market crisis, this thing should be way, way under $3.00. It's really a conundrum as Europe is reflating.....and the slowdown China could be temporary. Suddenly, this is not a clear and definite short.
Europe and China got nothing to do with it. They're just a context. Supply & Demand are the only factors. Demand is relatively stable - supply is currently lower than required to meet demand which would ordinarily be pumping the price way up. The only thing stopping it fly is that major supply will be coming in within the next few months. It's a definite short.
China has EVERYTHING to do with the price of copper. Of course, the generic "supply and demand" situation always dictates....but we are talking SPECIFICS here. Remember: Speculator Dennis Gartman has been a copper bull.....for quite some time.