Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Stock and Commodity Markets Caution Reigns

Stock-Markets / Financial Markets 2010 Feb 12, 2010 - 06:14 PM GMT

By: HRA_Advisory

Stock-Markets

Best Financial Markets Analysis ArticleThe January market dip was focused on profits taking. Good results in various sectors brought selling, but not sell-offs.  It is evidence that caution still reigns at the start of the new decade and isn’t really saying much else, for now.  It does indicate wealth preservation after the ‘08 Crunch is, and likely will continue to be, the focus of “Boomers” who are nearing the end of their working lives.  How long they are good with clipping low interest coupons is the next question on the table.


It took a while for this sentiment to make its way into the copper space, but the red metal’s price is now giving ground after having an extraordinary 10 month run.  The 40 cent price decline has been quick, but is only an 11% drop from the peak early in January.  There has been about a 3% gain to LME stockpiles since the price decline began in earnest.  It is too soon to make much of this, but we still think it likely copper will move through support in the high $2s and could test the $2.50 area. 

A price decline to that level would be near 30% and could generate headlines about both copper bubbles and the peril to the broader economy.  It would be a larger % than we thought was needed to test the market, but so far we have just seen froth blown off the market top; the mid $2s was the expected pull back when we got concerned about copper moving above $3.

The froth built in part due to the weak greenback, and it was US$ strengthening that finally tugged copper prices lower.  That and speculators shifting away from the metal on some impressive gains.  The US$ strength was generated by further moves to tighten lending in China and fear of sovereign defaults in Euroland. Currency fluctuations will continue influencing copper’s price for the next while.  Has this been a bubble? 

Price and supply gains in tandem do fit the basic definition.  However, we wouldn’t call the current LME stockpiles in the 15 days of supply range a major “oversupply” even though they represent the largest margin we have seen for about a decade.  Copper’s broad mine supply is typically well balanced to demand, and barring a major supply disruption it will take a while to eat through the excess stocks.  But, we are talking about a short run phenomenon.  “Bubble” is getting bandied about a lot lately.  It should be reserved for markets in which supply excess built over a long period, and that will take a long time to repair because of systemic damage. 

We have enough after-bubble markets to deal with that we don’t need see more in normal market overreach.  We may not be quite ready to jump into copper’s deep end just now, but the enthusiasm for its market has simply been because it is healthy.

In fact, amidst the concern about what direction the global economy is taking, a rare drama is unfolding in metal’s smelting arena. Codelco and BHP have both recently negotiated lower charges from East Asian copper smelters, low enough in fact to render the smelters marginal.  It has usually been the smelters that dictate charges, so this is the tail wagging the dog.

The combination of a near term smelting overbuild in China and a mid term concern by all smelters about a lack of mine supply is at play here.   For those of you who glaze over when we talk about century old trends, or even millennia old trends (ok, one of us just joined the glazing), it is just this sort of shift that we are looking for.   

While the supply concerns are most prominent in the copper subsector, they do apply to other metals.  The bottom line impact for HRA readers is that smelting companies are seeking out direct links to deposits.  This will be a growing source of funding projects, and mean more take-overs in due course.  It will also mean more focus on that part of the sector from us going forward.

Gold is rebounding nicely, in line with shifting sentiment for the greenback.  The down tick in this market has also been about profits taking, at least in part.  That currency traders going long the Dollar was able to cap gold more quickly than it did copper is still the most interesting bit of news to come from the recent trading.

How the next while plays out is still subject to diverse opinion, as it should be during such a major shift global of economic weightings.  The US$ is still being viewed as both a safe haven by some even while others focus more on the need for the greenback to soften longer term so the US can generate a positive trade flow.   Every bit of good economic stat has bond traders weighing whether it results from commerce or stimulus at work, and pondering whether the appetite for low interest T- bills can continue. 

Conspiracy theories abound about “someone” holding the equity markets up.  We find this ironic; the US Treasury is quite happy to see equity markets pull back and drive buyers into the Treasury market.

Debt troubles in Europe continue to generate currency swings and talk of (of course) a gold bubble. Default in Euroland would lift the USD, but bears should remember gold is a popular reserve asset lately too. The endgame could be better for bullion than most expect even in a default scenario.

We doubt a comfortable trend line will be obvious for a while yet.  The one assumption gaining currency is that China’s growth is central to sorting out the way ahead, and that some concern about its rapid rise in bank borrowing is warranted.  Even while reminding again that this borrowing is from domestic savings, we have to agree.  So apparently do Chinese officials.

A recent musing we heard spoke about a “hard landing” in China, but even this bearish stance meant a growth rate of only 6%.  Not reason to drop the wheels in our book, but still a caution since it speaks to the difficulty of what to focus on during the major shift that is underway.  That shift is accelerating, and this means uncertainty that will continue to roil markets.  This lack of clarity as much as anything else should keep gold on an uptrend.  We are certainly looking at base metal players, but gold will remain our main focus for the time being.    

O-Rings Impact
Through yon window breaks… one of two LiveCity prefab venues springing up to entertain Winter Olympic visitors to Vancouver.  Through other panes is the corridor linking the two sites, along which regular eating and drinking venues are gearing up to run 24-7.  Two of the seven road arteries that service downtown, and run past stadium and arena, have already been shut down.  A third will be closed this coming week.  Ticket holders have been told to show up 2 hours early. 

The city is asking downtown workers to stay home if they can, or at least to keep cars off of the road.   Most who watch the markets would find that easy enough to do even though they tend to travel outside of the main traffic flow times for the most part at any rate.  This is not, however, being pointed out to complain. 

Vancouver is blessed.  To the beauty of its natural setting and the calm of its denizens are added links that have helped shelter it from the worst of the economic storm that has battered many cities on its side of the dateline.  The city benefits richly from the flow of global commerce.  And yet Vancouver seems underwhelmed by the Olympic flow heading its way.

It seems, unfortunately, that security overrides the spirit of youthful competition in the post modern age.   That does not sit well with a very open city.  The month just ended is the warmest January on record, which is adding a degree of concern despite its impacting only one venue for which snow is being motored in.  More chaff for the naysayers in a city that also respects individuality and the right to express opinions.  The naysayers won’t, however, be in charge midmonth.       

After the gloom and doom of the past few years the world could use a party.  We hope the XXI Winter Olympics provides a blow-out one.  Once the willing have donned their party clothes we expect Vancouver to shift into event mode.   We will be doing some of that ourselves. 

HRA is not putting a gone for lunch sign on the door, nor will the city.  But the record volumes the Venture exchange has continued to rack up could ebb some, at least during highlight events.  That could make for some interesting trading in our end of the pond.  Worth keeping in mind, during the intermissions. Good luck & bon chance.


LATEST HRA OFFER: To access Eric Coffin’s latest interview and to sign up for our Latest FREE REPORT, including HRA’s most recent new company extended review and subscription savings, click here: http://www.hraadvisory.com/qa01.html

Gain access to potential gains of hundreds or even thousands of percent! From March to June, HRA introduced four new gold explorers to subscribers. Those four companies have generated an average gain of +205%, to date!

By David Coffin and Eric Coffin
http://www.hraadvisory.com

    David Coffin and Eric Coffin are the editors of the HRA Journal, HRA Dispatch and HRA Special Delivery; a family of publications that are focused on metals exploration, development and production companies. Combined mining industry and market experience of over 50 years has made them among the most trusted independent analysts in the sector since they began publication of The Hard Rock Analyst in 1995. They were among the first to draw attention to the current commodities super cycle and the disastrous effects of massive forward gold hedging backed up by low grade mining in the 1990's. They have generated one of the best track records in the business thanks to decades of experience and contacts throughout the industry that help them get the story to their readers first. Please visit their website at www.hraadvisory.com for more information.

    © 2010 Copyright HRA Advisory - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

    HRA Advisory Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules