Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
How to Trade Binance Vanilla Options for the First Time on Bitcoin Crypto's - 2nd Aug 21
From vaccine inequality to economic apartheid - 2nd Aug 21
Stock Market Intermediate Top Reached - 2nd Aug 21
Gold at a Crossroads of Hawkish Fed and High Inflation - 2nd Aug 21
Bitcoin, Crypto Market Black Swans from Google to Obsolescence - 1st Aug 21
Gold Stocks Autumn Rally - 1st Aug 21
Earn Upto 6% Interest Rate on USD Cash Deposits with Binance Crypto Exchange USDC amd BUSD - 1st Aug 21
Vuze XR VR 3D Camera Takes Near 2 Minutes to Turn On, Buggy Firmware - 1st Aug 21
Sun EXPLODES! Goes SuperNova! Will Any planets Survive? Jupiter? Pluto? - 1st Aug 21
USDT is 9-11 for Central Banks the Bitcoin Black Swan - Tether Un-Stable Coin Ponzi Schemes! - 30th Jul 21
Behavior of Inflation and US Treasury Bond Yields Seems… Contradictory - 30th Jul 21
Gold and Silver Precious Metals Technical Analysis - 30th Jul 21
The Inadvertent Debt/Inflation Trap – Is It Time for the Stock Market To Face The Music? - 30th Jul 21
Fed Stocks Nothingburger, Dollar Lower, Focus on GDP, PCE - 30th Jul 21
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock and Commodity Markets Caution Reigns

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

By: HRA_Advisory


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:

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

    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 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 - 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