Copper Collapse Coming?

Seeking Alpha ^ | 2-8-2010 | Pacifica Partners

[blam]

Copper Collapse Coming?

by: Pacifica Partners
February 08, 2010

Copper is often called “Dr. Copper” because of its ability to turn higher or lower in advance of turns in the broader economy. It almost seems like it has a Ph.D in economics – hence the moniker. Thus, some investors use copper prices as a sort of thermometer to get a sense of where the economy is headed. But when it comes to explaining the powerful momentum behind copper prices, most economists might be chagrined to find out that the laws of supply and demand do not seem to be working.

Many observers seem content to just offer “Chinese consumption” as an explanation for all things related to commodity price increases and leave it at that. Over time, we have tried to highlight the weaknesses of this blanket explanation. There seems to be a large amount of data that shows Chinese copper purchases are ending up as inventory for future use or speculators are building positions for investment purposes.

Last year, we devoted our July 30th comments in the Financial Post to an article titled: ”China: Do Risks Outweigh the Rewards (Again)?” Only five days later, the Chinese stock market topped out and has lost almost 20% of its value since then. We have felt that investors are not looking at the whole picture when it comes to commodities and the risks are real.

Just recently, Bloomberg quoted David Trelkeld, a 40 year veteran of the copper trading markets, as saying that about 90% of the buying in copper has been by speculators – including exchange traded funds (ETFs) which investors can buy as a way to gain exposure to the commodity. His call is for copper prices to plunge to levels that would essentially crash copper stocks. According to Threlkeld, “We’re going to see a catastrophe in the market.”

[blam]

Falling Copper Prices: The Doctor Is Out

[Diana in Wisconsin]

Well, cr@p. There goes my 10 lbs. of ‘copper holdings’ out in the workshop. ;)

http://www.kitcometals.com/charts/copper_historical_large.html

[Red Badger]

Dr. Copper?.........I’m a Copper, we’re a Copper, wouldn’t you like to be a Copper, too?.............

[N. Theknow]

What is the opening price for D'Anconia Copper today?

Atlas Shrugged reference

[Red Badger]

Sell d’Anconia Copper..............

[FromLori]

Have you seen this?

http://www.zerohedge.com/article/other-reason-us-not-regulating-wall-street

[Gorzaloon]

His call is for copper prices to plunge to levels that would essentially crash copper stocks. According to Threlkeld, “We’re going to see a catastrophe in the market.”

Good. I have to buy base metals for my raw materials, and I have really been jerked around especially last year. People who have no actual use for the metals have been playing speculative and manipulative games for a while now. My metal refiners keep saying, "There are NO fundamental reasons for these prices."

Jump, you @#$%^&*s.

[MrPiper]

Well, cr@p. There goes my 10 lbs. of ‘copper holdings’ out in the workshop. ;)

I hope lead and brass follow so the price for reloading ammo will once again be economical.

[CPT Clay]

Good article. WTO wont allow breakup of too big to Fail.

[Huck]

I sold my FCX a little too early. Been waiting for the copper market to come back down to earth so I can buy some more.

[WestwardHo]

Good. I have to buy base metals for my raw materials

We live in a copper mine town. One of the last company owned, non-union mines in the nation. It’s in a remote area. When the price of copper tanks, and there are lay-offs, it causes great hardship on young, hard working, low skilled families. They lose their jobs, and their housing.
Awful, awful!

[FromLori]

Yes see who signed us up for that clinton I did not know about that.

[blam]

"Have you seen this?"

Thanks, I did.

[Cacique]

btt

[BobinIL]

On a happy note. Maybe Ammo prices will start to come down. Copper jacketed bullets have doubled in price in the last year.

[nina0113]

When the price of copper tanks, and there are lay-offs, it causes great hardship on young, hard working, low skilled families. They lose their jobs, and their housing. Awful, awful!

I remember when the steel industry crashed in the 80s. I was living in Minnesota and the Iron Range was devastated. There was no work anywhere; people just loaded up their cars and left, and let the bank take their houses.

A coworker of mine remembers seeing mills outside Pittsburgh actually shut down, and they NEVER do. That was as heartbreaking to her (her family is steelworking) as seeing crops plowed under is to me (mine is farming).

Even when it doesn't affect you personally, you can't help crying for whoever it is, because you KNOW.

[rface]

yep.......I took a bit of a hit on copper.......but it sure could have been worse if I didn’t sell a month or more ago.....JJC

[Gorzaloon]

One of the last company owned, non-union mines in the nation. It’s in a remote area. When the price of copper tanks, and there are lay-offs, it causes great hardship on young, hard working, low skilled families. They lose their jobs, and their housing.

It's not the miners that are doing this. It's the people who hold the product for ransom. I don't know what to say about that local impact...I agree it's awful, but on the other side, my metals dealers and refiners have had many customers go under from the artificially high prices and manufacturers who have stayed in business have had to discontinue products based on some of the base metals, or have found substitutes for them. The miners and the users are not the ones getting megabucks from market hoarding, manipulation, and extortion.

[WestwardHo]

Even when it doesn’t affect you personally, you can’t help crying for whoever it is, because you KNOW.

We’re 60 miles from town, via a twisty mountain road, so when you see those pickup trucks, piled high with stuff, following a U-Haul, leaving town, you KNOW!
Even in “normal” times when there were jobs, it was grievous to behold. And now? Scary.