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Copper looks over-valued


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#1 DrBubb

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Posted 08 December 2010 - 08:49 AM

Copper looks over-valued
Credit-tightening in China may bring CU down
================================

Copper Chart - from below
QUOTE (DrBubb @ Jan 27 2011, 01:43 PM) <{POST_SNAPBACK}>
(( note: $9000 / 2204.6 = $4.08 per lb. ))


"JP Morgan Chase & Co. (NYSE:JPM) has bought up vast supplies of copper, indicating it may soon start a copper ETF. JP Morgan Chase & Co." ... Is this an etf bridge too far?

CU / Copper versus China etfs: FXI and HK2823 ... update


Ratio : Copper to FXI ... update

The ratio is back near 2008 highs.

The recent jump may be a reaction to the reported "short squeeze" by JPM

As JP Morgan shorts silver, they suddenly go long on copper .. December 7th, 2010

JP Morgan has been busy lately in the metals market. On Sunday it was discovered that they were the mystery buyer of over one billion pounds (monetary) of copper on the London Metals Exchange (LME). This purchase represents over 50% of the total amount of copper stored in London, and is a direct threat to cornering the local market for this commodity.

In an article * today from the Wall Street Journal, details and revelations of this purchase were brought to discovery
. . .
Here is the reality. Silver is global, as is copper. Since JP Morgan remained unnamed as they made their purchases, this probably means they have established their balance before anyone else, and will be selling as sheeple investors follow suit. With silver, JP Morgan is on the precipice to be forced to cover their shorts as the price continues to rise, so the ceiling for silver is still quite high.

Never follow the big boys unless you can get in at their price. More often than not, you will be the one paying their profits as they sell you their wares which they got much lower than you did.

/see: http://www.examiner....-long-on-copper

*(The bank bought the copper mostly on behalf of clients, according to a person familiar with the matter, so it doesn't directly own all the metal. But the buying spree does leave a large swathe of copper in the hands of one bank and its clients.)
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#2 DrBubb

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Posted 08 December 2010 - 10:41 AM

QUOTE (DrBubb @ Dec 8 2010, 04:49 PM) <{POST_SNAPBACK}>
"JP Morgan Chase & Co. (NYSE:JPM) has bought up vast supplies of copper, indicating it may soon start a copper ETF. JP Morgan Chase & Co." ... Is this an etf bridge too far?
*(The bank bought the copper mostly on behalf of clients, according to a person familiar with the matter, so it doesn't directly own all the metal. But the buying spree does leave a large swathe of copper in the hands of one bank and its clients.)

If there is suddenly little or no demand for a Copper etf, what is going to happen to that extra copper?
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#3 azazel

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Posted 08 December 2010 - 10:47 AM

QUOTE (DrBubb @ Dec 8 2010, 10:41 AM) <{POST_SNAPBACK}>
If there is suddenly little or no demand for a Copper etf, what is going to happen to that extra copper?


I think there will be a demand for a copper ETF. The price will rocket as money comes out of treasuries and flies into commodities, especially precious metals and semi precious metals such as copper which use to be used as money. We cant have any safe havens once the mega-inflation hits which is why they are stripping out the copper from our coins and replacing them with steel.

#4 DrBubb

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Posted 08 December 2010 - 12:11 PM

QUOTE (azazel @ Dec 8 2010, 06:47 PM) <{POST_SNAPBACK}>
I think there will be a demand for a copper ETF. The price will rocket as money comes out of treasuries and flies into commodities, especially precious metals and semi precious metals such as copper which use to be used as money. We cant have any safe havens once the mega-inflation hits which is why they are stripping out the copper from our coins and replacing them with steel.

Someday. Maybe.
But much of the immediate buying may have happened already, which is why that chart gap opened up.

JPM (and its client/s) have acquired $1 billion worth of copper. The punter may take much of that now, but suppose they do not want all of it, since China's tightening may restrict end demand. Some of that $1 billion worth may come back into the market, even as China takes less.

It would have been better for the market if the $1 billion investment represented new consumption, not just speculative buying by an etf-packager and its in-the-know client(s)
== ==

Here's another voice skeptical of Wall Street and its motives:
http://www.zerohedge...xt-market-crash
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#5 etfman

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Posted 08 December 2010 - 08:55 PM

I think when speculators issue their opinion on short term price movements that are of no relevance to long term investors they should also state their longer term price targets.

I don't really care if everything plummets in value as I have cash on the sidelines waiting to buy into several investments. I am much more interested in longer term targets.

I am in the commodities supercycle group of thinking as I don't believe that USA or UK will stop printing money (vast sums of it). Money which will fuel speculative buys into pretty much any assett.

#6 G0ldfinger

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Posted 08 December 2010 - 09:25 PM

QUOTE (etfman @ Dec 8 2010, 09:55 PM) <{POST_SNAPBACK}>
...
I am in the commodities supercycle group of thinking as I don't believe that USA or UK will stop printing money (vast sums of it). Money which will fuel speculative buys into pretty much any assett.

Neither will China!
You can't tax deflation.
“Currency Induced Cost-Push Hyperinflation” vs “Demand-Pull (non-hyper) Inflation.”
The "no income --> no inflation"-thesis is as wrong as the "price control --> inflation control"-thesis.
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#7 underling

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Posted 09 December 2010 - 06:36 PM

QUOTE (DrBubb @ Dec 8 2010, 10:41 AM) <{POST_SNAPBACK}>
If there is suddenly little or no demand for a Copper etf, what is going to happen to that extra copper?


Though there may be demand for an ETF could the resultant suggested higher prices lead to demand destruction for the actual metal ?

I've already seen within my industry (Plumbing and Heating) a marked switch from using copper product to using alternative materials in the UK. A prime example would be for copper tubing which now is almost twice the selling price per metre as (oil-based) plastic alternatives. The higher copper prices will also have a knock-on effect on many other products and we're expecting to see increases in the price of brassware. We're also for the first time in the industry seeing hot water storage cylinders for open-vented systems made of stainless steel (a far more suitable material and offering greater longevity) selling for the same price as their copper alternatives. Affordability of copper issues may actually produce a change in our industry that may be hard to reverse as installers become accustomed to using a product or material that offers advantages over their expensive copper alternative.

Whether this sector using copper is large enough to effect price of copper (and indeed oil if the alternative uses the material) in any great way is yours to gauge or predict.




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#8 VictorBroom

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Posted 11 December 2010 - 09:30 AM

QUOTE (underling @ Dec 9 2010, 06:36 PM) <{POST_SNAPBACK}>
Though there may be demand for an ETF could the resultant suggested higher prices lead to demand destruction for the actual metal ?

I've already seen within my industry (Plumbing and Heating) a marked switch from using copper product to using alternative materials in the UK. A prime example would be for copper tubing which now is almost twice the selling price per metre as (oil-based) plastic alternatives. The higher copper prices will also have a knock-on effect on many other products and we're expecting to see increases in the price of brassware. We're also for the first time in the industry seeing hot water storage cylinders for open-vented systems made of stainless steel (a far more suitable material and offering greater longevity) selling for the same price as their copper alternatives. Affordability of copper issues may actually produce a change in our industry that may be hard to reverse as installers become accustomed to using a product or material that offers advantages over their expensive copper alternative.

Whether this sector using copper is large enough to effect price of copper (and indeed oil if the alternative uses the material) in any great way is yours to gauge or predict.


That's interesting underling. I guess an industry will always find the best solution to a problem over time.

I buy a lot of cable as our company manufactures wiring harnesses (looms) and battery cables. All I can do is sit and watch copper go up each day. I can't see copper wire being replaced any time soon - or even at all. Even the plastics used in the insulation of the cable are even going up. I buy a lot of cable ties. These are generally made from Nylon 6-6 and the price of nylon has gone through the roof. I digress.

I found a chart showing industry usage of copper:



See this LME link for more detail. Looks like the construction sector uses a fair bit. I wonder what percentage of construction is plumbing
Go against the flow.

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#9 underling

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Posted 11 December 2010 - 12:19 PM

QUOTE (VictorBroom @ Dec 11 2010, 09:30 AM) <{POST_SNAPBACK}>
I guess an industry will always find the best solution to a problem over time.

I buy a lot of cable as our company manufactures wiring harnesses (looms) and battery cables. All I can do is sit and watch copper go up each day. I can't see copper wire being replaced any time soon - or even at all. Even the plastics used in the insulation of the cable are even going up. I buy a lot of cable ties. These are generally made from Nylon 6-6 and the price of nylon has gone through the roof. I digress.

I found a chart showing industry usage of copper:



See this LME link for more detail. Looks like the construction sector uses a fair bit. I wonder what percentage of construction is plumbing


Thanks for the chart.

Though it's a little bit before my time it's worth investigating the details of the "copper shortages" during the 70's. Plastic (uPVC/ABS) alternatives were used (general life of around 25 years) but, as a product which was generally used in industrial applications, it was not best suited/designed for domestic installations so never really became a longterm alternative. Today is very different with plastic pipework (various polymers and recycled material) being specified on a huge majority of new-build and offering in many ways a superior alternative to copper, though historically at a higher price.

The industrial/commercial market has for a long time now been replacing steel/iron pipework with a plastic alternative pretty much wherever possible. Mains water and Gas supply pipework in most cases is for example supplied in MDPE/HPPE where previously spun ductile iron pipework was used. My own personal guess is that we will see a similar change in the domestic sector should we see continued high copper prices. I doubt that an increased demand for plastic in this sector would have as great an effect on oil prices as I imagine it has quite the same proportion of demand share as it does on copper.

The electrical/electronic sector though as you say is a little bit at the mercy of market prices.


Do not believe in anything simply because you have heard it. Do not believe in anything simply because it is spoken and rumored by many. Do not believe in anything simply because it is found written in your religious books. Do not believe in anything merely on the authority of your teachers and elders. Do not believe in traditions because they have been handed down for many generations. But after observation and analysis, when you find that anything agrees with reason and is conducive to the good and benefit of one and all, then accept it and live up to it.

#10 DrBubb

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Posted 21 December 2010 - 02:02 PM

QUOTE (DrBubb @ Dec 8 2010, 04:49 PM) <{POST_SNAPBACK}>
Ratio : Copper to FXI ... update

The ratio is back near 2008 highs.

THE RATIO is at the top of a channel now - right near 10:1


Let's see if Cu tires now

RATIO=== 12/17/10 : Hi of Yr
Copper-- : $420.60 : $420.60
FXI-stock : $ 42.38 : $ 47.99
======= ============
The Ratio : R - 9.92 : R - 8.76

FXI should follow HK's China etf higher (it was up 0.47% today) - that would add $0.21 to FXI, and $2.10 to Copper,
assuming the Ratio was unchanged.
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#11 chris ct

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Posted 27 December 2010 - 05:00 PM

Double post from the Hyper thread... Early days yet but:

oops, here is GF's thesis in a nutshell. Prices in USDs go up as China raises rates.

METALS-US copper inches up to record, unfazed by China rates

27 Dec 2010 - 15:46

* March COMEX copper hits record high 429.85 cents/lb
* Shanghai hit low of 68,310 yuan at start of trade
* Chile supply concerns to underpin sentiment
* Coming up: CFTC trader position data at 3:30 p.m. EST

http://tinyurl.com/yjnqo5p
All I wanna hear is that JPM is soon going to explode in a gigantic supernova that will take the Fed, Goldman, AIG, UBS, HSBC, Citi, and BofA with it, leaving behind a white dwarf that we will name "God's work".
The reason for this? see 1984 thread: "http://tinyurl.com/yepltr6" ak47 bomb bioweapon semtex ar15 glock 7.62mm allah jesus buddah fuse ricin plot plan operation grenade rocket ied phone poison anthrax airport runway invasion armor body bullet explosive hollowpoint explode gas mask NBC dirty plutonium nuke suitcase gas needle hypodermic

#12 DrBubb

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Posted 27 January 2011 - 05:43 AM

Copper May Decline to $9,000 on Sell Signal: Technical Analysis

(( note: $9000 / 2204.6 = $4.08 per lb. ))



By Bloomberg News - Jan 25, 2011

Copper will probably drop to around $9,000 a metric ton before resuming its advance to a record, said Wang Yaoyao, a technical analyst at Huawen Futures Co.

Tom DeMark’s Sequential and Combo indicators, designed to identify tops and bottoms and anticipate reversals, both give sell signals on copper for three-month delivery on the London Metal Exchange, Shanghai-based Wang said in a phone interview.

The metal used in cable and wiring climbed to a record $9,781 a ton on Jan. 19 on expectation that global demand led by China will outstrip supply, and traded at $9,478.50 a ton today. The commodity advanced 30 percent last year, the third-best performer of the six base metals traded on the bourse.

“The pattern shows it’s time to go short,” said Wang. “Looking at the daily and weekly charts, TD Combo and Sequential both showed the market topped last week. This doesn’t happen often, and is a strong alert for correction.”

The TD Sequential, which seeks to anticipate “trend exhaustion,” and the TD Combo indicator, which traces a security’s price movements, had shown a so-called 13 count countdown, said Wang. The pattern signals copper may decline to test support at $9,070 a ton, and may slide to $8,470 a ton if that level doesn’t hold, she said.

Huawen Futures, a member of the Shanghai Futures Exchange, the Dalian Commodity Exchange and Zhengzhou Commodity Exchange, provides brokerage for metals and agriculture futures.

Technical analysts observe price charts to forecast resistance levels, or ceilings restricting price increases, and support levels, or floors limiting declines. The trading patterns and prices are used to predict changes in a security, commodity, currency or index.

- Helen Sun. Editor: James Poole

/see: http://www.bloomberg...l-analysis.html
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#13 DrBubb

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Posted 27 January 2011 - 06:04 AM

QUOTE (DrBubb @ Dec 21 2010, 10:02 PM) <{POST_SNAPBACK}>
Let's see if Cu tires now
RATIO=== 12/17/10 : Hi of Yr
Copper-- : $420.60 : $420.60
FXI-stock : $ 42.38 : $ 47.99
======= ============
The Ratio : R - 9.92 : R - 8.76

CU - etf... : $ 41.41 : $

FXI should follow HK's China etf higher (it was up 0.47% today) - that would add $0.21 to FXI, and $2.10 to Copper,
assuming the Ratio was unchanged.


12/17/10 : CU - etf... : $ 41.41 :
2011 Jan High was ... : $ 45.27
Now:
CU : 42.96 Change: +0.93 // Percent Change: +2.16%
Open: 41.80 High: 43.23 Low: 41.80 // Volume: 40,869

FXI: 43.09 Change: +0.26 // Percent Change: +0.60%
Open: 43.16 High: 43.22 Low: 42.92 // Volume: 15,161,415



COMPARE:
d2010= CU= : FXI= : C-F==
12/20 : 41.40 : 42.38 : -0.98
12/21 : 42.00 : 43.27 : -1.27
12/22 : 42.20 : 43.15 : -0.95
12/23 : 43.38 : 42.60 : $0.78
12/27 : 41.96 : 42.55 : -0.59
12/28 : 43.20 : 42.19 : $1.01
12/29 : 43.25 : 42.78 : $0.47 : 2nd closest
12/30 : 43.30 : 42.67 : $0.63
12/31 : 43.71 : 43.09 : $0.62
01/03 : 44.15 : 43.73 : $0.42 : closest
01/04 : 43.80 : 44.28 : -0.48
01/05 : 43.45 : 44.32 : -0.87
01/06 : 42.75 : 43.97 : -1.22
01/07 : 42.37 : 43.65 : -1.28
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#14 Bold As Brass

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Posted 27 January 2011 - 09:11 AM

In the modern world, does the expression 'copper looks over valued' have any meaning?

Does the 'price' of copper have any relationship with its 'value'.

Given the mass manipulation of the price courtesy of people trading in options etc. - how can one determine whether the price of copper represents 'value'. Unless you are privvy to the actions of the people rigging the market, how can you tell?

#15 aliveandkicking

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Posted 27 January 2011 - 09:36 AM

QUOTE (Bold As Brass @ Jan 27 2011, 09:11 PM) <{POST_SNAPBACK}>
In the modern world, does the expression 'copper looks over valued' have any meaning?

Does the 'price' of copper have any relationship with its 'value'.

Given the mass manipulation of the price courtesy of people trading in options etc. - how can one determine whether the price of copper represents 'value'. Unless you are privvy to the actions of the people rigging the market, how can you tell?


You dont need manipulation to account for the price when China India and Brazil are all growing at over 8%pa.

#16 DrBubb

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Posted 27 January 2011 - 09:42 AM

QUOTE (Bold As Brass @ Jan 27 2011, 05:11 PM) <{POST_SNAPBACK}>
In the modern world, does the expression 'copper looks over valued' have any meaning?
Does the 'price' of copper have any relationship with its 'value'.

I tracked the price using this thread, and did a reasonable job of zeroeing in on the TURN.

Next, we need to see if it was a major turn or not.

The OUTPERFORMANCE versus China, was a sign it was getting toppy.
The gap remains very wide, even as China adds measures to slow its own housing boom.

Remember "Dr Copper" is a good indicator of the strength of the global economy, so it does bear watching

Copper to FXI Ratio ... update

The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix




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