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Copper is an important driver for our market in that it is a bulk commodity that the world still wants and we have in abundance.So do some other continents. But it can be a useful litmus test as to what consumer demand is in the likes of India and China and in turn how solid the outlook might be for our miners such as BHP RIO and others. So it is worth a look.
Let’s look at the short term picture first:
click chart for more detail
We all know equity markets have been falling in recent weeks but what we can see is that copper has bucked the trend short term. How come – well, the answer is in the short term fundamentals which I try to stay away from.
Let’s look at a weekly chart and see if there is an opposing view:
click chart for more detail
And so we can see it all more clearly now. We can see copper has held up at its ‘highs’ of the last couple of years – and haven’t they been high – still over twice its long term average. Is there a risk to the downside? We can’t tell that from this chart nor can we see any basis for it heading higher for the time being.
I would like to show you a monthly chart but no matter which way I looked at it I could not find anything useful.
But like you I know that the economic world is still a bit shaky and I played around with the daily chart again and took a longer term perspective – 300 days- and look what I came up with:
click chart for more detail
I asked myself was I looking for a chart to support my hunch. Not really but I always look for a chart that is different as that may make me think a little harder and causes me to ask the question: “What if I am wrong?”.
Anyway I am not putting money on copper at the moment – neither long nor short.
Enjoy the ride
Tom Scollon
Chief Analyst
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