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Trading Lessons

Copper Strong, Good News for Chile, Bad News for the US

Commodities / Copper Sep 01, 2017 - 12:30 PM GMT

By: Metals_Report

Commodities

Technical analyst Clive Maund analyzes why the rising copper price is good news for Chile.

Copper is looking strong, apparently due in part to China stockpiling it, and this of course augurs well for the Precious Metals, especially silver, as copper "shows the way," which is why it is known as Dr. Copper. As we can see on its 5-year chart, it has already broken out of a Head-and-Shoulders bottom to enter a bullmarket. Right now it is overbought and has resistance to work its way through, so periods of consolidation are to be expected.


The rising copper price is good news for Chile, as copper is its main export earner, and the Chilean mining industry has been in a nasty slump for the past five to seven years, due to the lower copper and gold prices.

The photo below, taken from a circling Learjet, shows the world's biggest open pit, Chuquicamata, a copper mine near to Calama in northern Chile, owned by state run company Codelco.

The true scale of this open pit is revealed by the following picture which shows an ore truck looking like a toy, driving down among the terraces.

These trucks are 100-ton monsters that burn as much fuel in a day as the average car owner uses in a year.


Photos by Maund.

The rising copper price is the major reason why the Chilean peso has started to strengthen and this week the dollar broke down from a large top area on the dollar/Chilean peso chart, as we can see on its 5-year chart below. While the Chilean peso is hardly one of the most important currencies on the planet, this chart by itself looks very ugly for the dollar, and taken together with other dollar cross rate charts, it suggests that dollar that we are looking for is starting or about to get started.

So – good news for Chile and the metals complex, bad news for the dollar and the U.S.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

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Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts and photos provided by the author.


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