Copper's 200-day exponential MA is quickly approaching $300: stockcharts.com
At the rate the 200 MA is rising, Copper could break out to a new high and then test the 200 MA at around the current price or higher in a few months. Even if copper drops below $300 to test the 200 MA, copper stocks are already priced for much lower copper, especially non-producing juniors. Same for other base metal miners.
Here's an article out today, "Gold Mining Stocks - Blood, Sweat and Tears," that argues that current Chinese growth in infrastructure makes base metals recession proof: 321gold.com
"China is now the 2nd largest consumer of oil in the world versus only 10 years ago when it was 20th. Oil consumption is a solid measure of economic activity and this stat is telling the world that base metals and precious metals will be in high demand next - as hundreds of millions of new middle class consumers buy jewelry, air conditioners, televisions and cars. Massive infrastructure projects will also require large quantities of base metals - and a U.S. or Chinese recession will not stop bridges and roads and power lines being built in China. Huge state projects (in any country) are financed by paper money or government debt and are recession proof."
Despite the title of the article mentioning gold stocks, they go on to recommend investing in base metal companies as well:
"The long term prospects are also excellent for base metal companies with multi-billion dollar deposits of valuable metals that a new global economy will demand in greater and greater quantities in the years to come."
Several of my biggest holdings (MMGG, CUU, NTO) match this description perfectly, though they all also have silver and/or gold. I think they've all priced in much lower base metal prices, so any short-term pullback to the 200 MA should be offset by coming specific company events. In any case, as the article mentions, remaining invested through volatility should be rewarded very handsomely longer term, and at a time like now with undervalued mining stocks, it's a time to buy, not sell. |
