Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The Most Exciting Biotech Stock Of The Year? - 17th May 21
Gold Mining Stocks Fundamentals - 17th May 21
Junior Gold Miners Should be Rallying – What’s Holding Them Back? - 17th May 21
Stock Market - Should You Be In Cash Right Now? - 17th May 21
Learning the Financial Markets - 17th May 21
INVESTING IN HIGH RISK TECH STOCKS - ALL OR NOTHING - 16th May 21
Is Stock Market Selling Madness About Over? - 16th May 21
Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
Budgies Birds of Paradise Indoor Grape Vine Singing, Chirping and Flying Parakeets Fun 3D VR180 UK - 16th May 21
Wall Street Roiled by Hot Inflation Data: Is This REALLY “Transitory”? - 16th May 21
Inflation Going Stag - 16th May 21
CHIA Coins After 1st Week of Plotting 140 Plot 14tb Farm. Crunching the Numbers How to Win - 15th May 21
Tips to Create the Best Cross-Functional Teams - 15th May 21
Gold: Lose a Battle to Win the War - 14th May 21
Are You Invested in America’s “Two-Hour Boom” Fast Shipping Stocks? - 14th May 21
Gold to Benefit from Mounting US Debt Pile - 14th May 21
6 Solid Signs You Should Have Your Smart Device Repaired Right Away - 14th May 21
Ways to Finance Your Business Growth - 14th May 21
Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
How Much CHIA Coins Profit from 100 Plot 10tb Farm? Hard Drive Space Mining - 13th May 21
Stock Market Bulls Getting Caught in the Whirlwind - 13th May 21
Legoland Windsor Mini land and Sky Train Virtual Tour in VR 360 - UK London Holidays 2021 - 13th May 21
Peak Growth and Inflation - 13th May 21
Where’s The Fed? Watch Precious Metals For Signs Of Inflation Panic - 13th May 21
Coronavius Covid-19 in Italy in August 2019! - 13th May 21
India Covid Apocalypse Heralds Catastrophe for Pakistan and Bangladesh - 13th May 21
TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
Gold Price During Hyperinflation - 12th May 21
Stock Market Extending Phase Two? - 12th May 21
Crypto 101 for new traders – ETH or BTC? - 12th May 21
Stock Market Enters Early Summer Correction Trend Forecast Time Window - 11th May 21
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
Cathy Wood Bubble Bursts as ARK Funds CRASH! Enter into a Severe Bear Market - 11th May 21
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Why Copper is in a Long-Term Bull Market

Commodities / Metals & Mining May 06, 2011 - 05:39 AM GMT

By: Money_Morning

Commodities

Best Financial Markets Analysis ArticleKerri Shannon writes: With metals and commodities on a long-term bull-market run, investors have recently turned their attention to copper.

The red metal's price recently has fallen due to mixed economic data. Copper's use as an industrial metal - it's widely used in buildings, electronics, appliances and automobiles - makes it sensitive to economic growth prospects.


But despite the recent dip, many analysts and industry experts have a bullish copper price forecast.

Barrick Gold Corp. (NYSE: ABX), the world's biggest gold company, announced a big bet on copper last week with a $7.68 billion offer for copper producer Equinox Minerals Ltd.

Barrick relies on gold for 80% of its revenue, but will double its copper position with the Equinox purchase. Barrick Chief Executive Officer Aaron Regent said Equinox's copper reserves are a hard-to-come-by asset.

"Directionally, I would say that most of the long-term copper price assumptions that are being used right now are understating what's going to happen," Regent said.

Many Money Morning readers have been writing to the Mailbag asking about investing in copper. Money Morning Contributing Editor and natural resource expert Peter Krauth answered the following questions with his copper price forecast.

Question: What about the price of copper? Any idea if this red metal will be the next gold? I've been hearing that China will be backing their currency with this metal in the near future - any truth to that? AndasJapan rebuilds they are going to need tons of copper, right?

I'd like to hear your thoughts on how copper will play out in the coming months and years. Is ittimetoload up the boat?

-- Bob

Peter Krauth: As I consider all commodities to be in a long-term secular bull market, copper should be a great place to invest for the medium and long term.

There's little doubt that copper is an important, perhaps even strategic, metal. It's widely used in industry, including electrical, engineering, building, and transport applications. And with the rise of Chindia (China and India), home to one third of the world's population, demand for copper is likely to remain strong for many years still.

Despite the credit crisis, which saw the price of copper plummet to $1.25 per pound from $4.00 per pound, the all-important metal has come roaring back with a vengeance. Since its early 2009 lows, copper has easily surpassed its 2008 highs, reaching $4.60 in mid-February this year.

Copper's price has been gradually trending downwards over the last couple of months. At this point, we've seen copper's price back off to the $4.00 level. I suspect this is for two reasons: The price got ahead of itself despite strong demand fundamentals, and there's continued uncertainty whether the U.S. Federal Reserve will follow up its second round of quantitative easing with "QE3."

Also, copper's recent highs were reached with copper stocks at historically high levels -near 450,000 tons. That also could weigh on the price for a while.

A potential floor for copper could well be around the $3.50 to $3.75 per pound area.
But I'd expect to see copper resume its rise after bottoming near those levels.

As far as copper being the next gold, there's a key difference between these two metals. Though it's used in coinage, copper is essentially an industrial metal. Gold is essentially used for investment and jewelry. So clearly these two metals have different fundamental drivers.

I doubt that China will use copper to back its currency, at least not copper by itself.

Remember that China is the largest holder of U.S. debt, and that debt is losing value daily as the U.S. dollar declines. It would make sense for China to shift significant portions of its $3 trillion in foreign exchange reserves into hard assets, like base metals, which it will need anyway to continue to build out its infrastructure.

In my view, it's not outside the realm of possibility that China would want to increase its influence on the world stage by allowing its currency, the yuan, to float freely and be supported with hard assets. I can envision a time when China would use a basket of base and precious metals to back its yuan, thereby making it a highly desirable currency.

As for Japan, the country's devastating earthquake, tsunami, and nuclear disasters will certainly add to the demand for copper. So I think these unfortunate events will help to keep a floor under the copper price going forward.

Q: Do you have any copper/copper mining stocks to recommend?

-- John S.

Krauth: If you want to play copper directly, consider the iPath DJ-UBS Copper TR Sub-Index ETN (NYSE: JJC). It tracks the price of copper futures contracts less fees and expenses, but appears to be weighed down by those fees, thereby underperforming the spot price of copper.

My preferred option is the copper miners. Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) (profiled in a recent "Buy, Sell or Hold" article by Money Morning Contributing Writer Jack Barnes) is the world's largest publicly traded copper producer. It's currently trading at a very respectable Price/Earnings ratio of 11, while yielding a 1.8% dividend. Watch for it to bottom along with copper, then consider taking a long-term position and view with FCX.

[Editor's Note: Back in August, Peter Krauth recommended that subscribers to his "Global Resource Alert" advisory service add a silver exchange-traded fund (ETF). Silver was trading at $18 an ounce at the time, but Krauth's research indicated that a major upsurge was imminent. That upsurge came, though Krauth chuckled, and admitted candidly in a recent interview that "even I didn't expect this kind of run..." Nevertheless, Krauth's subscribers are now up more than 145% in less than eight months - and that's without having had to use risky leverage of any kind.

For more information on Krauth's portfolio, or on the "Global Resource Alert" in general, please click here.]

Source : http://moneymorning.com/2011/05/06/...

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 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