(All contect in these articles should be viewed as opinion by our AP's)
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As the global economy goes, so do copper prices |
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by: Bill Reavis
May 16th, 2012
Copper has reached five month lows in the Comex July contract today (5/16/12) and has lost 10.5% in the past two weeks. The majority of the decline can be attributed to a poor global economic outlook. If you follow the copper market, moves like this are not uncommon.
September of last year saw the price of copper drop 17.75% within a week. The cause of the move at that time was a drastic cut in demand from China. (Bloomberg Data Feed 5/16/12)
Much of the same fundamentals are driving this market as investors have retreated from risky assets after assessing the impact of Greece's possible exit from the euro zone and a slowdown in China's economy.
Recent data showed that China's economy weakened, even from levels of its slowest quarter of growth in three years. Industrial production growth slowed sharply in April and fixed asset investment - a key growth driver - hit its lowest level in nearly a decade. China uses as much as 40 percent of the global supply of copper. (Rueters 5/15/12)
Copper is a versatile and unique metal used in many construction and electrical applications. The metal is sometimes referred to the “economic bellweather”: A decrease in the demand for copper typically indicates a decrease in new construction.
This week, copper broke through a key support level ~3.5 and, technically, it looks like it has some room to fall further.. The next major support level is 3.023, the low in October 2011. During the global recession in December 2008, copper was as low as 1.5155.
The Survival Plan, Mini Survival Plan, and Diversified Commodity Basket all trade copper and all entered a short position recently.
Copper Chart
Regards,
Bill Reavis
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239-221-8873
An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources, and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
This is provided for informational purposes only. No statement in this blog should be construed as a recommendation to buy or sell a futures/options contract or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. |
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