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Itís Time to Sell Copper
The Daily Reckoning ^ | 3-19-2013 | Greg Guenthner

Posted on 03/19/2013 10:34:52 AM PDT by blam

It’s Time to Sell Copper

By Greg Guenthner
03/19/13

Dr. Copper is crumbling.

The versatile industrial metal best known as a bellwether for worldwide economic growth has finally hit the skids…

I warned you last month that copper was fast approaching an important inflection point. Now, the Cyprus crisis was kind enough to tip copper over the edge. It fell hard in late Sunday trading from $3.50 to $3.44.

The massacre continued into Monday. When the dust settled, copper found itself nearly a dime below critical support…

Yet while the world economy appears poised for a slowdown, U.S. stocks continue to fight off lower copper prices for the past 15 months. The S&P has defied copper’s weakness since the metal peaked in 2011…

The price of copper had been dangerously close to crashing since the beginning of March. Now that its multiyear uptrend is in the rearview, we’re in store for lower prices.

Huge inventory surpluses have helped push copper lower. In London, copper stockpiles rose to 543,925 tons yesterday, the highest level in 3 years. In Shanghai, stockpiles climbed to 231,872 tons, the highest level recorded since 2003, according to Bloomberg.

If you haven’t sold copper yet, this key turning point is your cue. $3.30 is my initial downside target. If weakness persists, we could see copper test its 2011 lows near $3.


TOPICS: News/Current Events
KEYWORDS: commodities; copper; markets; stocks

1 posted on 03/19/2013 10:34:52 AM PDT by blam
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To: blam


2 posted on 03/19/2013 10:36:25 AM PDT by blam
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To: blam

I knew that someday all that wire I stripped would come in handy ;-)


3 posted on 03/19/2013 10:36:47 AM PDT by rockrr (Everything is different now...)
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To: blam

Why sell it now when it’s going down? That’ll just drive the market down even further.


4 posted on 03/19/2013 10:40:34 AM PDT by MeganC (The left have so twisted public perceptions that the truth now appears pornographic.- SpaceBar)
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To: blam

near-term looks almost ready to buy.
Long term, tough call. I am surprised that the increased demand for ammunition has not put support in place, unless their is an incredible stock of recycled copper we don’t know about.


5 posted on 03/19/2013 10:44:33 AM PDT by hkusp40
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To: hkusp40

Copper stolen from foreclosed homes is a fairly large supply.


6 posted on 03/19/2013 10:58:46 AM PDT by thackney (life is fragile, handle with prayer)
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To: MeganC

Maybe you bought it at $2 and you decide it’s time to lock in some profit.


7 posted on 03/19/2013 10:58:59 AM PDT by willgolfforfood
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To: blam

Good. It would be nice to be able to buy a spool of 12-2/WG without taking out a loan.


8 posted on 03/19/2013 11:00:07 AM PDT by soycd
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To: blam

Coincidentally/ironically the word “copper” comes from the Greek word for the island of Cyprus, or “Kupros” which was a rich source of the mineral in ancient times.


9 posted on 03/19/2013 11:07:18 AM PDT by babble-on
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To: babble-on

Neat input....thanks.


10 posted on 03/19/2013 11:11:21 AM PDT by blam
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To: blam

How about SILVER?


11 posted on 03/19/2013 11:16:18 AM PDT by Big Red Badger
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To: Big Red Badger

A visitor from the future told me to invest in Zinc.


12 posted on 03/19/2013 11:16:52 AM PDT by dfwgator
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To: Big Red Badger

13 posted on 03/19/2013 11:18:59 AM PDT by blam
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To: blam

buy , sell?
why is it stagnant?


14 posted on 03/19/2013 11:22:07 AM PDT by Big Red Badger
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To: blam

I was just reading that D’Aconia Copper mines was going to have a disaster tomorrow...


15 posted on 03/19/2013 11:23:37 AM PDT by BlueMondaySkipper (Involuntarily subsidizing the parasite class since 1981)
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To: Big Red Badger
I'm holding.

At some point....we'll have some serious inflation.

16 posted on 03/19/2013 11:25:30 AM PDT by blam
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To: blam

I heartily advise people to not touch copper with a 10-foot pole, as it has long been a totally controlled market, that does not want outsiders profiting from it.

To cite a very good example, remember when the US went from thick copper cables to fiber optic? It ended up with enough surplus copper to build half a dozen aircraft carriers entirely out of pure copper. And what happened to the price of copper? Nothing. All that copper never reentered the market.

Sure, if you want to nickel and dime copper, feel free. But stay away from ambitious investments in it, or you will get cleaned out.


17 posted on 03/19/2013 12:02:04 PM PDT by yefragetuwrabrumuy (Best WoT news at rantburg.com)
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To: blam
I have two rolls of these beauties that I'm holding just 'cuz I like them.


18 posted on 03/19/2013 12:51:19 PM PDT by Mich Patriot (PITCH BLACK is the new "transparent")
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To: Billthedrill

Ping. Look at the image in Post #18.


19 posted on 03/19/2013 12:59:12 PM PDT by Publius
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To: yefragetuwrabrumuy
You've provided some of the analysis of the fundamentals I was looking for, to confirm the technical market analysis in the article. The technical analysis in the article does indicate a bearish market opinion about copper -- but, what do the fundamentals say?

I used to live in a copper-mining district & made the same point as you, about the switch from copper to fiber optic cable -- but, never considered that the market could be controlled. Can you point us to some solid evidence of the hoarding that would be necessary to control market prices that way. I know that the (jewel-quality) diamond market is controlled -- but, that gambit hasn't worked out very well in other commodities markets. (Recall the Hunt Bros. and silver?)

Another factor to consider is the switch from wired to wireless telephony. That may not have nearly as large an effect on copper demand in the developed world, as the switch to fiber optic cable; but, it seems to be effectively eliminating most opportunities to grow the market in the third world. Under-developed countries are installing wireless networks, and completely leapfrogging wired communications technology.

On the other hand; electric vehicles could boost demand for copper (when and if they ever become economically viable). Similarly, demand for electric generators of all types is set to continue growing.

Another source of demand for copper was created at about the time that fiber optic cables weakened demand for communications -- home wiring. For a time, it looked like aluminum was a viable substitute for copper wiring. Then, it became obvious that aluminum wiring was hazardous, and most people went back to using copper wiring.

The same could be said for many other uses of copper. There will always be substitution at the margin (as in any market). If the price of copper goes down, the demand will go up, and vice versa, because of the substitution effects.


20 posted on 03/19/2013 1:05:05 PM PDT by USFRIENDINVICTORIA
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To: USFRIENDINVICTORIA

There is a big difference between copper producers controlling the market, and De Beers monopolistic control, and the Hunt brothers trying to corner silver.

To start with copper at the production level, even small prices in copper will open or close mines, a very expensive proposition. And the ore is so low grade that when the price of copper drops, at times the gold mined as a by product is actually worth more than the copper.

So the producers very much want price stability. Second, because copper is fairly low value, their biggest concerns are purposes and companies that consume a lot. Another good reason for stability being provision contracts. Large amounts of copper sold at fixed prices.


21 posted on 03/19/2013 4:02:16 PM PDT by yefragetuwrabrumuy (Best WoT news at rantburg.com)
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