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Glencore is a FTSE-listed resource trader that floated in May this year. I could not help but be amused by its timing - not perfect, but close to it.
I was not a participant in the listing as I have no interested in trading companies. It’s not so much that I am in a flight to the safety of ‘bricks and mortar’ and ‘miners that have producing mines’, rather that this stock in the medium-term – say one year - is likely to head lower because metals are reaching a major peak.
Let’s look at copper:
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In the short-term metals are headed lower.
Further out they may well move higher:
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But further out still, a major pullback is a real prospect:
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The wave four pullback is about 50% retracement from 2009 – just about Goldilocks-right.
Inflationary pressures are driven by resources (fundamentally) as this is consumer- and demand-driven inflation. Buyers are balking at paying more for raw materials and some small cracks are appearing in the major furnace of the world - China. It needs to slow down for an overhaul.
So why would you buy copper or miners now? And especially a mining trader? I will be watching this stock with interest in the coming years.
Enjoy the ride
Tom Scollon
Chief Analyst |