Best of the Week
Most Popular
1.Will UK Interest Rate Rises Crash House Prices? - Nadeem_Walayat
2.Full on Crash Alert for Major World Stock Markets... - Clive_Maund
3.Gold And Silver Market Bottoming? Big Rally Imminent? Reality Check Says NO - Michael_Noonan
4.The Coming Silver Price Rally Will Outperform All Previous Ones - Hubert_Moolman
5.The Trigger For The Upcoming Stock Crash - Harry_Dent
6.Imploding Department Store Results - James_Quinn
7.Dr. Copper is Speaking, are you Listening? ... - Rambus_Chartology
8.Pandemonium in the Stock Market, Dow falls 1,000 points in a week - EWI
9.Asia's Whirling Dervish of Devaluations Has Encircled China's Exports - Keith_Hilden
10.China Weakens the Yuan; Rattles Global Stock and Financial Markets - Gary_Dorsch
Last 5 days
The Real Threat from China’s Stock Market Crash - 2nd Sept 15
How Our “Mixed Economy” Created These Mixed-Up Markets - 2nd Sept 15
'Gravity' Is Returning to Stocks and Bond Markets - 2nd Sept 15
OPEC Divorce And Self-Destruction Thanks To Saudi Crude Oil Strategy? - 1st Sept 15
The Beginning Of A New Financial / Stock Market Cycle - 1st Sept 15
Three Things Every Master Trader Knows About Trading Options - 1st Sept 15
Chinese Yuan Revolution? - 1st Sept 15
Take Advantage of Record-High Auto Sales… Before This Bubble Bursts - 1st Sept 15
Pondering Hitler's Legacy - 1st Sept 15
Mainstream Media Goes Berserk - 1st Sept 15
Your Decisive Stock Market Plan to Follow Whilst Most Investors Shiver With Fear - 1st Sept 15
Are There Stock and Financial Markets Investing Opportunities For The Remainder Of 2015 - 1st Sept 15
Crude Oil Price Forecast 2015 and 2016 - 1st Sept 15
REPO Window Hidden $Trillion QE Monthly Volume - 31st Aug 15
Silver and Warnings From Exponential Markets - 31st Aug 15
Stock Market Calls Fed’s Bluff - 31st Aug 15
Why Some ETFs Led the Stock Markets Down Last Week - 31st Aug 15
Stock Market Collapse - Take The Opportunity To Bail Before It’s Too Late! - 31st Aug 15
The Most Important Market Chart on The Planet - 31st Aug 15
Stock Market 50% Retracement - 31st Aug 15
Stock Market Crash Red Alert for 2nd Downwave... - 31st Aug 15
Independant Scotland 1 Year on, UK Civil War If the SNP Fanatics Had Succeeded - 30th Aug 15
Gold’s 7 Point Broadening Top - 30th Aug 15
The Day the Stock Market Shook the Earth: Takeaways From the Dow’s 1,000-Point Drop - 30th Aug 15
Gold Price Rally Marked by Short Covering - 30th Aug 15
Aging Stocks Bull Market - 29th Aug 15
Economic Destabilization, Financial Meltdown and the Rigging of the Shanghai Stock Market? - 29th Aug 15
The Stocks You Should Be Buying After the Market Drop - 29th Aug 15
How I Learned to Stop Worrying and Love Market Fluctuations - 28th Aug 15
China's Yuan Devaluation: Why It Was "Expected" - 28th Aug 15
Stocks Go Nuts But the Question Remains – Will the Rally Stick? - 28th Aug 15
Fed’s Stock Market Levitation is Failing - 28th Aug 15
The Eight Energy Systems Driving The Stock Market Rout - 28th Aug 15
Silver Sold, then Squeezed - 28th Aug 15
U.S. Economic Fundamentals 'Look Good' - Bullard of St. Louis Fed - 28th Aug 15
Stock Market Margin Calls Mount - 28th Aug 15
Einstein, Physics, Gold and The Formula To End Economic Decay - 28th Aug 15
The 10 Best Stocks for Options Trading Plays in This Market - 28th Aug 15
Economics of a Stock Market Crash - 28th Aug 15
Currency Wars Detonate; Gold Refuses to Budge - 28th Aug 15
UK Immigration Crisis Hits New Record, Trending Towards Becoming a Catastrophe - 28th Aug 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Global Stocks Slide

Dr. Copper and the Chinese Housing Market Bubble

Housing-Market / China Economy Jun 23, 2011 - 04:31 AM GMT

By: Submissions

Housing-Market

Best Financial Markets Analysis ArticleThe mighty Dr. Copper; the only metal has a suffix attached to his name, for his accuracy predating equity prices for years. In the past 30 months or so, copper had a fantastic performance, almost quadrupled its price from December 2008 lows. But recently, this is becoming more of a story about emerging market infrastructure spree than acclaimed shortages.


An article in daily mail about a Chinese ghost city Kangbashi may give us some idea about the scale of the spree.

From dailymail.co.uk:

One approach road leads past what was until recently a 30,000-seater stadium, costing £100 million and rushed to completion in nine months for last year's Mongolian Games - horse-racing, archery and wrestling. When it was opened, it looked rather like Concorde about to take off. But soon after New Year's Day, a whole white wing, plus the central peak, collapsed during the night.

As the ancient Chinese saying goes:” one shall invest in art in heyday and own gold in troubled times:” With some Chinese art prices soaring to unprecedented levels, not doubt we are in a boom time. However, anybody who studied some history may ponder the question whether this time is different. Looking at the media flooded with articles about how superior a state-driven fixed asset investment economy is, I couldn’t help but wonder if anyone experiences the same déjà vu as I do.


Supply wise, for all the Malthusians I’ve got bad news for you. BBC just discovered new source of copper supply! They are in Goldman’s warehouse! Several prominent website has already covered this story in detail:

BBC bubble trouble interview via ftalphavilla.ft.com

MR: In fact it turned out that only about 40% of the copper was on the LME’s official stocks, and therefore visible to the market.

From Zerohedge.com:

The primary driver of this anti-competitive behavior is the fact that GS, JPM and Glencore now control virtually the entire inventory bottlenecking pathways: "In recent years, major investment banks like Goldman and J.P. Morgan and commodities houses like Glencore have been snapping up warehouses around the world, turning the industry from a disperse grouping of independent operators into another arm of Wall Street. The LME has licensed about 600 warehouses around the world.


Copper guru Simon Hunt explained:

The real story about copper is the size of the financial sector’s involvement in buying surplus copper and warehousing it outside the reporting system both in your country and elsewhere, which probably started in 2006.  This is what creates robust demand, which is quite different to consumption. 

I’m also a big believer in seasonality; the chance of a market collapse in autumn is just too high for me to discredit markets seasonal traits. So I examined three major housing bubble in the past 20 years or so, the Japan asset bubble, Asian tiger, and US housing bubble and put them into a seasonal perspective, presidential cycle in this case. These three housing bubbles are each characterized by the same stated-induced cheap credit, reckless speculation, and debt fueled asset inflation. And here is the result:

If the Chinese housing bubble talk is validated, with inflation pressure mounting up and further tightening measures in emerging market, Simon hunt’s prediction of copper price plunging to 7500 level surely could be realized by year end. After that, copper price tend to rally at the beginning of election year, and an even lower copper price in second half of 2012 is not avoided.

Bio:

I’m an independent trader live in Shanghai, feel free to visit my website: riskhacker.blogspot.com.

Copyright © 2011 Risk Hacker - 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.


© 2005-2015 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

Biggest Debt Bomb in History