``It's not new metal, it's just being relocated to LME-
monitored stockpiles from other warehouses,'' Bhar said.
He may be right. I had thought that there was probably a little more copper sitting around in inventories than was actually needed. While this is being drawn down, there will be a temporary slackening of demand and a build up of warehouse stocks.
However, perhaps the
slowing of consumer demand and the need for further stimulus, will see an increase in
infrastructure expenditures; particularly in the provision of electric power generation.
I'm very much a long-term bull. I believe that we have had interest rates that have been too high on a worldwide basis. This has resulted because of a white-hot U.S. economy. Now, I believe you will see rates come down throughout the world and ignite a healthier economy. It will be healthier because the U.S. won't be carrying as much of the final demand burden.
Tax cuts and easier money throughout the world will produce the kind of growth which will create a very nice demand for copper.
Would you consider shorting the metal?
Well, I did consider it at higher prices, but never acted. Of course at that time I didn't see the U.S. slowdown as being quite as nasty as I think it will be now. So I'm kind of torn. On the one hand, I know there will be a lot of traders who do a knee-jerk reaction to a slowdown and sell an industrial commodity. On the other hand, I think at 80 cents or below, production of copper will slowdown as the more expensive producers pull back. |
