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copperbullion
Penny Pincher Member
Australia
136 Posts |
 Posted - 06/06/2008 : 21:05:20
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Metals – A few months ago, most analysts and investors prematurely called the end of the copper bull-market. According to these folks, such high prices were unsustainable and the copper “bubble” had popped! You may remember that I disagreed with this view and maintained my position regarding a multi-year primary bull-market for all types of commodities. Furthermore, towards the end of last year, I even highlighted copper as a great buying opportunity. Since then, the price of copper has risen significantly.
Furthermore, it seems to me as though copper is currently consolidating prior to launching higher. In case you are confused as to how copper can rise given the nasty housing recession in the US, you should take into account the fact that China uses up roughly 30% of the world’s copper and its economy is expanding at roughly 10% per annum. In other words, physical demand for the metal is robust in Asia and other parts of the developing world.
It is forecast that global copper demand will continue to rise by 4% per annum over the coming decade. This implies that the industry will have to deliver an additional 1.4 billion pounds of copper every year. This is equivalent to four big new mines every year for the next 10 years! Plus, another four new mines will be required every year over the coming decade just to replace depleted mines! I do not know about you but at least in my eyes, this seems like a gigantic if not impossible task! On the supply side, Chile is the biggest producer of copper and its power situation does not look promising. It is likely that similar to South Africa, Chile will see power shortages this year. Roughly 40% of Chilean power is hydro and 60% is thermal (mainly from natural gas supplied by Argentina). Chilean power demand is rising by roughly 5% per annum and with a reduction in hydro-electricity this year due to less rain, thermal power generation would have to rise by roughly 20% to meet demand. This seems unlikely and a power crisis in Chile seems to be on the cards. Should it occur, Chilean copper output will be affected as the operating mines receive less than adequate power supplies. Since Chile is the key player in copper, this is a very bullish development especially with the metal trading close to its all-time high. If you have not done so already, now is a good time to invest in diversified miners with exposure to copper.
Original article: You must be logged in to see this link.
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Edited by - copperbullion on 06/06/2008 21:06:40 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 06/07/2008 : 14:53:43
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A bull and bear will look at the exact same data and come to exactly the opposite conclusion.
A bit off topic but worth mentioning-
one housing bull economist Sean Snaith refuses to consider that the housing bubble has gone bust in Florida.
Despite the fact that sales are off big time, jobs have been lost, fog-the-mirror and geat a loan type lending has ended, Snaith still refuses to accept housing has gone bust.
Conclusion: Even experts can be dead wrong just like the rest of us non-experts, with so called experts being wrong at the worst possible moment.
The paper pushers on Wall Street still refuse to accept the idea that commodities are a decent investment through ETFs or physical posession of commodities. One possible reason for this is the fear that investor's money will be pulled out of stocks and bonds (the chief items that wall street pushes) and start flowing into commodities. What better way to keep the money in Wall Street than to have Wall Street 'experts' talk down commodities?
The only way base metals will really start falling in price (real cause and effect, not Wall Street fiction) is if India and China slow down their purchase of Base Metals.
Footnote: A bubble isn't a bubble until almost all the talking head investment experts are singing the praises for the bubble based investment (or until a bubble blog concerning copper gets set up, and that hasn't happened yet.) |
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Nickelless
Administrator
USA
5580 Posts |
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Positive Copper Comments!
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