Massive Buying in Gold and Mining Stocks
June Gold closed up at a 25 year high of $618 per ounce in NY. Comex Silver May silver surged 51 cents to close at $13.36 per ounce, after rally to $13.38, a 23 year high. Platinum, Palladium and Copper continued to set multi-year highs as well.
The speculation for why this move higher remain the same. Massive buying from the Indian and Chinese coupled with the newly rich middle east on soaring Oil prices going and diversifying its assets by buying Gold remain possible explanations. For the bulls so far, so good.
I am writing this post from Santiago, Chile. Chile is the world's largest producer of Copper, with 35% of the world's Copper coming from this country. Thanks to copper, chile is now the star of Latin America, and having lived in different parts of the world myself, I can tell you from first hand experience that living in Santiago is the same as living in Berlin or Dallas (cost of living, general development of the city, etc).
Why do I bring this up? Because I overheard a conversation in Starbucks between two Chileans who, shall we say, didn't sound like the best of investing minds. The common public. They were talking about selling the dollar and buying some copper. Now that is interesting.
When the common masses are wanting to join a multi-year trend, the time has come to take profits. The end of the rally is close; it doesn't mean that prices will collapse, but further gains will be hard to come by. And more risky.
Call me cautious, but it is prudent to wait on the sidelines to see a big fall in these stocks before stepping to buy back in.
Sanjay John G.
The speculation for why this move higher remain the same. Massive buying from the Indian and Chinese coupled with the newly rich middle east on soaring Oil prices going and diversifying its assets by buying Gold remain possible explanations. For the bulls so far, so good.
I am writing this post from Santiago, Chile. Chile is the world's largest producer of Copper, with 35% of the world's Copper coming from this country. Thanks to copper, chile is now the star of Latin America, and having lived in different parts of the world myself, I can tell you from first hand experience that living in Santiago is the same as living in Berlin or Dallas (cost of living, general development of the city, etc).
Why do I bring this up? Because I overheard a conversation in Starbucks between two Chileans who, shall we say, didn't sound like the best of investing minds. The common public. They were talking about selling the dollar and buying some copper. Now that is interesting.
When the common masses are wanting to join a multi-year trend, the time has come to take profits. The end of the rally is close; it doesn't mean that prices will collapse, but further gains will be hard to come by. And more risky.
Call me cautious, but it is prudent to wait on the sidelines to see a big fall in these stocks before stepping to buy back in.
Sanjay John G.
4 Comments:
Good comment about being careful when the general public buys, but isn't that when you have the parabolic blow off? Copper has doubled in the past year and zinc is up 146%, without U.S. demand increasing. China industrial demand could be increasing (their GDP is up 10%, and Chilean exports of copper rose 63% last year) but it's just as likely a devaluation of the dollar. The copper price was 40 cents a pound in 1959. It is $2.90 today. That's a nine bagger in 47 years, but remember, here were some other prices in 1959:
Gallon Of Gas: $0.25
Gallon Of Milk: $1.01
Loaf Of Bread: $0.20
New Car: $2,250.00
New House: $12,400.00
Ounce Of Gold: $35.00
Ounce Of Silver: $0.90
Yearly Income: $5,016.00
This post has been removed by the author.
Absolutely right about the parabolic blow-offs. Someone is left holding the bag, and I don't want to be that person.
These rallies could go on longer, but is it worth the risk? It is not about the reward; it is optimizing the risk/reward which makes a successful investor or speculator.
Sanjay John G.
As in any commodity, inventories say a lot, copper inventories went up a couple of days ago 7% when they used to be 3 days! I still think inventories are below the threshold level where you may see spikes in copper prices due to buyer panic...
The USD doesn't look that well either. Since BoJ started reigning in liquidity, the last of the major CBs to do so, the US current account deficit will stick like a sore thumb, wekening the USD.
If currencies play the fixed interlocking that we've been seeing, in order to maintain local emloyment, all metals are bound to gain in prices.
Morgan Stanley raised China's growth to 9.5% from 7.8%.
Jiangxi Copper, the largest producer in China, quote:
***"The country's copper consumption will outstrip supply this year," said chairman He Changming at a press conference Thursday in Hong Kong. "I expect the global copper price will hover at a high level."
He forecast domestic copper consumption will rise to 3.6 million tonnes this year, 38 percent higher than the 2.6 million tonnes of copper output.***
Read the full interview here:
http://www.thestandard.com.hk/news_search_resu.asp
I'll hold my copper position for a while...
Post a Comment
Links to this post:
Create a Link
<< Home