we are seeing a pretty long-term pennant
formation, which indicates that the buyers and sellers are getting closer and closer
to being in agreement on where the price
should be. This sets the stage for a disruption on either side that would cause the
prices to break out of the increasingly narrow trading range.
We would watch for inventory levels and
economic activity in both China and the
USA for clues for a breakout. US housing
is at the beginning of a long-term, demographic demand for first-time homes. New
homes contain 300 to 400 pounds of copper,
so the demand will be steady and increasing
in both China and the USA.
A physical copper-backed ETF has been
proposed by JP Morgan but interest waned
with the drop in the price of copper. From
a contrarian perspective, now would be a
good time to get this into the market place.
However, it is more likely to happen after
a surge in demand and price. It has the
potential to divert a lot of copper away
from industrial uses into pure speculative
and investment storage, thereby decreasing
the supply needed by industry and forcing
prices up.
16 www.resourceworld.com
RW December 2013.indd 16
DECEMBER/JANUARY 2014
12/11/2013 6:11 PM
