Moving Average Indicators for Principal Asset Classes

Wednesday, January 18th, 2012

I often use the 50-day moving average as an indicator of the secondary trend of a stock market, and the 200-day moving average as an indicator of the key primary trend. Specifically, one would like to see a stock market index trading above both these measure, but importantly above the longer-term 200-day line.

I have analyzed the moving averages of the principal asset classes using yesterday’s closing levels. The following are a few key observations:

1. The U.S. stock market indices and Brazil are above both the 50- and 200-day moving averages. (In the case of the Dow (DJI 12482.07 �‘0.00%) Jones Industrial Average and the South African All Share Index, the 50-day averages are also above the 200-day figures, representing a bullish signal called a golden cross.)

2. China is below both their 50- and 200-day lines.

3. India and Russia are above the 50-day averages, but below the longer term 200-day averages.

4. The euro is below both averages.

5. The oil price, U.S. dollar and U.S. government bonds are above both the 50- and 200-day lines.

6. The CRB Index (commodities) has just crept back above its 50-day average, but is still below the key 200-day average.

7. Gold last week breached its 200-day line to the upside, but still trades below the 50-day line.

In summary, the safe havens like government bonds and the U.S. dollar still have fairly solid technical pictures, but are starting to look stretched. In the meantime, more and more risky assets are starting to show promise as seen from the constructive action of a number of stock markets and some commodities.

Tags: Asset Classes, Bullish Signal, Commodities, Constructive Action, Crb Index, Dji, Dow, Golden Cross, Index Trading, Moving Averages, Oil Price, Risky Assets, Safe Havens, Share Index, Stock Market Index, Stock Market Indices, Stock Markets, Trades, U S Government Bonds, U S Stock Market
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Commodities Oversold For Now, Dollar Holds The Key

Tuesday, October 25th, 2011

by Dian Chu, market analyst, trader and author of the EconMatters blog.

Below are trading range charts for 10 major commodities from the Bespoke Group. All 10 commodities are currently at or below the bottom of their trading ranges, which would suggest at the moment, a good opportunity to get in at oversold levels for investors looking to gain long-term exposure.

However, the U.S. dollar has been strengthening as investors fled the Euro debt and financial crisis seeking safety in the dollar. Since most commodities are priced in dollar, dollar movement will have considerable impact on commodity prices. EconMatters guest author, Frank Holmes at US Global Investors, estimates that a 5% appreciation in the dollar could be associated with a 25% decline in commodity prices, based on the relationship between the CRB Index basket of 19 commodities and the Dollar Index.

So if the U.S. dollar continues to strengthen, which is quite probable with the burning Athens, and the lack of leadership and clarity in the Euro Zone, it would most likely put downward pressures on commodity prices.

But on the other hand, the U.S. Federal Reserve has already telegraphed the intention of yet another round of quantitative easing (QE3). So the effect on the dollar, and thus commodities, would depend on how QE3 is implemented. We suspect that the Fed now understands how QE2 has artificially jacked up commodity prices as well as inflaiton (although they will never admit it in public), and most likely will strive for a “commodity neutral” QE3.

However, if QE3 does translate into a similar effect to QE2, then commodities would be artificially inflated even further, which would suggest stagflation, and hyperinflation could be expected in most of the developed countries, and developing economies, respectively.

Source: Dian Chu, EconMatters, October 20, 2011.

Tags: Author Frank, Commodities, Commodity Prices, Crb Index, Developed Countries, Developing Economies, Dian, Dollar Index, Euro Debt, Euro Zone, Frank Holmes, Global Investors, Guest Author, Hyperinflation, Market Analyst, Qe3, Range Charts, stagflation, Term Exposure, Trading Commodities, Trading Ranges
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Adam Hewison: Technical Update – June 15, 2011 1:00 p.m.

Thursday, June 16th, 2011

Adam Hewison, charting strategist of INO.TV, brings you another edition of his invaluable service of daily technical updates on the ups and downs of various markets. This short analysis is a great tool for keeping one’s finger on the pulse and timing the markets.

Click the image below to hear his latest views on gold , silver, the US Dollar Index, the CRB Index, crude oil and the S&P 500 Index. Also, click here to have an instant analysis of any ticker symbol in your portfolio performed by INO. We feature the daily update in the right hand column of this site; it is updated every day around 1 p.m. and it is worth watching.

Now here’s a brief summary of what’s in today’s video and what’s happening right now in the major markets:

– SP 500: -70. The market action today can only be described as negative. A score is now -70 and our downside target for this market is 1250. Major downside support is at 1250.

– Silver: -70. I would watch this market very carefully today as I feel that it is probably at the lower end of its range. We would use the Donchian Channels along with the fact that this market is oversold and expect to see a bounce from current levels. Major Support at 34.00.

– Gold: +70. Gold is currently oversold and we expect to see this market balance sometime in the near future. We would not be surprised to see further sideways action but we want to be long this market as the Donchian channel comes in at 1503. Major support at 1,500.

– Crude Oil: +55 Trading range. This market continues to pound out a base to go higher. Long term indicator remains positive. Support coming into this market at $96/barrel. This market is currently oversold and choppy.

– The Dollar Index: -55. Despite today’s strong dollar rally in the index, the longer-term and mid-term Trade Triangles remain negative. Resistance now at 76.50. The dollar index is now in overbought territory. Minor support at 73.50 and major support at 73.00.

– Reuters/Jefferies CRB Commodity Index: +55. This index is now beginning to reach an oversold condition and we may see further backing and filling-in softness. Near-term resistance at 350.00. Minor support at 340. Major support at 335.00. Trading range.

The big question is are we going to close lower seven weeks in a row in the major indexes. Many people trading the markets now have not seen the classic bear market which does not give you a chance to get out. Several of our major long-term indicators are close to turning negative and when they do we would recommend moving into an all cash position for hitting any portfolio you might have in stocks.

Tags: Crb Index, Crude Oil, Donchian Channel, Donchian Channels, Finger On The Pulse, Gold Silver, Hand Column, Instant Analysis, Invaluable Service, Negative Resistance, Reuters, S Finger, S&P 500, Sideways Action, Strong Dollar, Target, Technical Updates, Term Indicator, Ups, Ups And Downs, Us Dollar Index
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Moving Averages Flirting With Key Levels

Wednesday, November 24th, 2010

I yesterday summarized my market view in a post entitled “Commodity prices – on a knife’s edge”. For some additional perspective, I consider the key moving averages of the principal asset classes in the following paragraphs:

The major moving-average levels for the benchmark U.S. stock market indices, the BRIC countries and South Africa (where I am based in Cape Town when not traveling), are given in the table below. The key observation is that after the nascent correction, most major indices are within striking distance of their 50-day moving averages. As a matter of fact, emerging-market indices such as the Shanghai Composite Index, the Bombay Sensex Index and the Brazilian Bovespa Index have already breached the 50-day lines. However, all the indices in the table are still trading above their key 200-day moving averages – often used as an indicator of the primary trend.

Click here or on the table below for a larger image.

From across the pond, David Fuller (Fullermoney) provides the following perspective: “Technical evidence of this corrective phase can now be seen in the combinations of recently failed upside breaks, downward dynamics, breaks of rising lows within the prior short-term uptrends, and the ranging loss of upside momentum. It would be prudent to expect this process to continue for a while longer in what is at least a partial mean reversion towards the rising 200-day moving averages.”

The table below shows moving averages for the other major asset classes – commodities, gold, currencies and government bonds. Interestingly, the Reuters/Jeffries CRB Index (commodities) is still marginally above its 50 DMA, whereas West Texas Intermediate Crude has just breached the 50-day line. The U.S. Dollar Index’s recent strength pushed the greenback above its 50 DMA (but still below the key 200 DMA), whereas the U.S. dollar/euro exchange rate has fallen below its 50 DMA (but is still above the 200 DMA). The other noteworthy readings are that gold bullion remains comfortably above all the key moving averages, while the 10-year Treasury Note yield has breached the 50DMA but still has some way to go to give a primary sell signal, and the commencement of a secular bear market, by crossing the 200 DMA.

Click here or on the table below for a larger image.

I have been warning for some time that “risk off” could be the order of the day for a while, and remain cautious regarding risky assets.

Tags: Bombay Sensex Index, Bovespa Index, Brazil, BRIC, Bric Countries, BRICs, Commodities, Commodity Prices, Corrective Phase, Crb Index, David Fuller, Dollar Euro Exchange Rate, Emerging Market Indices, Euro Exchange Rate, Fullermoney, Gold Currencies, Government Bonds, Mean Reversion, Moving Averages, Shanghai Composite Index, Stock Market Indices, Technical Evidence, U S Stock Market, Uptrends
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Commodities: Time To Go Long and Physical

Thursday, June 3rd, 2010

This article is a guest contribution by Dian L. Chu, Economic Forecasts and Opinions

Deutsche Bank AG recently noted that commodities will continue to “struggle” as the dollar strengthens and China seeks to restrain growth.  Looking at the recent performance between the CRB index, S&P 500 and Legg Mason Emerging Market (LGEMX) would certainly seem to support Deutsche’s view.  (Chart 1)

Bears Gripping Commodity

Right now, due to the sluggish growth in industrialized nations, China remains the single largest consumer and buyer of many commodities.

Although China’s long term growth prospect remains strong, Beijing has started monetary tightening measures, amid concern of asset bubbles and inflation. The latest PMI data also suggests China economy could be slowing down.

Furthermore, with the euro and European Union saddled by PIIGS, dollar could continue to strengthen against euro in the near to medium term amid global risk aversion. Since most commodities are priced in dollar, a stronger dollar typically would depress the price and returns of commodities.

Market Over-reacting

The current momentum of key commodities including oil, copper and gold should be moving higher.  This will happen as soon as investors feel less nervous about the Greek and European drama with the euro gaining support from four major central banks today, and signals of continuing easy monetary policy around the world.

The Gulf oil spill seems to be another event which the markets are having anxieties over. It is true that the Gulf oil spill disaster does have economic and environmental impact to the U.S. Gulf coast, but in the global scheme of things, this most likely will not cause significant enough impact to the fundamentals of crude oil or economic direction to warrant a full blown commodity bear market.

Tags: Bear Market, Central Banks, China, China Economy, Commodities, Commodities Market, Crb Index, Deutsche Bank Ag, Economic Direction, Economic Forecasts, Emerging Market, ETF, ETFs, European Drama, Global Scheme, Gold, Growth Prospect, Gulf Oil, Legg Mason, Natural Gas, oil, Oil Spill, Pullback, Risk Aversion, Scheme Of Things, Sluggish Growth, Term Investors
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A Decade of Hot Commodities

Sunday, January 24th, 2010

A Decade of Hot Commodities

By Frank Holmes, CEO, US Global Funds, January 19, 2010

We’ve updated our popular Periodic Table of Commodity Returns, and the headline news should come as no surprise – 2009 was a complete turnaround for the sector’s 2008 performance.

Commodities (as measured by the Reuters-Jefferies CRB Index) rose 24 percent in 2009, the largest single-year increase since the early 1970s.

In 2008, only one of the 14 commodities in the table finished positive – gold, up a scant 5.8 percent – while five finished with losses exceeding 50 percent, led by lead at a negative 63.5 percent.

Last year, only three of the 14 ended up underwater for the year, with coal coming in at rock bottom at minus 13 percent. Four of the industrial metals – copper, lead, zinc and palladium – each rose more than 100 percent in 2009.

Just to get into the top half of 2009’s performers, a commodity needed gains of about 57 percent, as you can see with platinum in the 10-year chart above. In fact, while gold received tonnes of attention last year, its 24 percent returns were only good enough for 10th place.

There are many ways to analyze the data in the periodic table – I’ll share just a few basic observations.

• Of the 140 squares in the table (14 commodities times 10 years), 92 of them contain positive returns – that’s just under two-thirds success covering a range from the spectacular 320 percent up year for natural gas in 2000 down to the microscopic 0.02 percent gain by crude oil in 2006.
• Gold had the most positive years – its streak now stands at nine straight years after a 5.5 percent loss in 2000, when the bullion price dipped below $265, roughly a quarter of the current price. Oil, platinum and silver all had eight positive years during the decade, while nickel had six down years.
• Natural gas had the most extreme swings, finishing at #1 three times and at the bottom twice. One year after recording the biggest yearly gain in 2000, natural gas had the worst single-year loss – minus 74 percent.
• Aluminum and silver had the least relative volatility and the most years hovering around the middle. Even in their best performance year (2009), both were in the bottom half – silver at #8 and aluminum at #9.

We believe that the secular bull market for commodities and natural resources stocks that began in 2000 is far from over. The International Monetary Fund believes that commodity prices will rise further in 2010 as a result of global economic recovery and escalating demand from fast-growing emerging markets.

The expanding middle class in China, Brazil and the other biggest emerging economies want more of the material goods taken for granted in the developed world. They are laying claim to a bigger share of the world’s commodities, many of which could face future supply constraints.

History shows that commodity supercycles typically last 20 to 25 years, though not without periods of volatility. If the current cycle follows the historic pattern, we could be just starting the second half of a prolonged upward trend.

View the Complete Interactive Table

Tags: Brazil, Bullion Price, China, Commodities, Commodity, Crb Index, Crude Oil, Emerging Markets, energy, Frank Holmes, Global Funds, Gold, Gold Bullion, Headline News, Hot Commodities, Industrial Metals, January 19, Jefferies, Natural Gas, Natural Resources, nickel, oil, Palladium, Periodic Table, Price Oil, Reuters, Rock Bottom, Squares, Zinc
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The Case for Commodities in 2010 (And Beyond)

Sunday, January 24th, 2010

By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors, Inc.

The biggest emerging economies have ambitious plans that require a greater share of the world’s limited commodities. This trend is spurring profound and permanent disruptions in how these resources are allocated now and in the future. For investors, these disruptions present opportunities.

Simply put, an investment in natural resources is a vote of confidence in global economic growth.

Rapid urbanization and industrialization, better infrastructure and growing consumption in emerging markets are among the key themes in the global growth story. They are also key drivers in the rising demand for oil, steel, copper, cement and other resources.

Here are just a few of the many available data points to help gauge the scale of opportunity:

• Just over half of the world’s people now live in cities – that figure is likely to rise to 70 percent over the next four decades. The urban population in emerging nations has expanded by an average of 3 million per week for the past 20 years.
• India has embarked on a $500 billion plan to expand and upgrade its highways, airports and other transportation assets by 2012.
• More than 13 million cars and light trucks were sold in China in 2009, transforming a land once dominated by bicycles into the largest auto market in the world. Forecasts for 2010 call for vehicle sales to increase by as much as 10 percent.

Commodities (as measured by the Reuters-Jefferies CRB Index) shot up 24 percent in 2009, the largest single-year increase since the early 1970s, and the International Monetary Fund projects that prices will keep rising this year due to emerging-markets demand and global economic recovery.

China’s economic growth is often mentioned in the context of commodities prices and demand – indeed, China surprised many by growing its GDP at an 8 percent rate in 2009, with commodity-heavy infrastructure investment playing a major role.

Less often discussed is China’s rapidly growing middle class (chart). Estimates are that as many as 25 percent of Chinese – more people than the entire U.S. population – fall into this category now, with a doubling possible within the next decade. While most dramatic in China, it is also under way in India, Brazil and elsewhere. This rise of the “American Dream” in emerging nations is memorably portrayed in the Oscar-winning movie “Slumdog Millionaire.”

This trend has huge implications for commodities. Wealthier people want a better lifestyle. That means more and better housing – in addition to the structure itself (cement, steel), that means more wiring for electricity (copper), more plumbing (copper, zinc) and more basic appliances (steel, copper and other metals).

They also want better transportation, as we’ve seen in China. In only 10 years, China has gone from being the world’s 20th largest oil consumer to No. 2 behind the United States as a result of its accelerating shift from the bicycle to the car. Getting around also means more roads, more bridges, more airports, more and faster railroads – all of which add to commodities demand.

While demand is growing, the supply of many key commodities is not keeping pace.

It is increasingly difficult and costly to find and develop large new oil fields, and mining projects are often slowed down by environmental opposition and tighter regulatory requirements. Many promising new commodity sources are in countries with inadequate infrastructure and/or significant political risks.

Commodity supercycles typically last 20 to 25 years – the current supercycle began in 2000, so we are just at the halfway mark. A stress in the markets is that insufficient capital has been invested in resources in recent decades, while at the same time the world’s population has doubled and there has been spectacular growth in the middle class. Any supply disruptions quickly lead to price spikes.

There are other reasons to consider an investment in commodities or commodity-based equities, be it through an actively managed natural resources fund or a passive vehicle like an index fund or exchange-traded fund.

We’re hearing more talk about inflation – natural resources are one of the few asset classes that benefit from inflation. If prices for fuel or other commodities rise, one way to hedge against the impact of that price increase is to invest in those commodities.

Commodities are also a natural hedge against the erosive impact of a weak dollar. Given massive federal deficits for the next decade, yawning trade deficits and historically low interest rates, it is hard to see how the dollar could see a sustainable rally any time soon.

For the reasons detailed above, we believe that the secular bull market for commodities and natural resources stocks remains intact and could even intensify in 2010, depending on the extent of economic recovery in developed nations.

Tags: Auto Market, Brazil, Chief Investment Officer, China, Commodities, Commodities Prices, Crb Index, Emerging Economies, Emerging Markets, energy, Frank Holmes, Fund Projects, Global Economic Growth, India, Infrastructure Investment, International Monetary Fund, Largest Auto, Light Trucks, Million Cars, Natural Resources, oil, Rapid Urbanization, Transportation Assets, U S Global Investors, U S Global Investors Inc, Urban Population, Vote Of Confidence, World Forecasts
Posted in Brazil, Canadian Market, China, Commodities, Emerging Markets, Energy & Natural Resources, India, Infrastructure, Markets | 1 Comment »

China Keeps Moving Forward

Saturday, January 16th, 2010

China Keeps Moving Forward

By Frank Holmes
U.S. Global Investors
CEO and Chief Investment Officer

We’ve updated our popular Periodic Table of Commodity Returns, and the headline news should come as no surprise – 2009 was a complete turnaround for the sector’s 2008 performance.

Commodities (as measured by the Reuters-Jefferies CRB Index) rose 24 percent in 2009, the largest single-year increase since the early 1970s.

In 2008, only one of the 14 commodities in the table finished positive – gold, up a scant 5.8 percent – while five finished with losses exceeding 50 percent, led by lead at a negative 63.5 percent.

Last year, only three of the 14 ended up underwater for the year, with coal coming in at rock bottom at minus 13 percent. Four of the industrial metals – copper, lead, zinc and palladium – each rose more than 100 percent in 2009.

Just to get into the top half of 2009′s performers, a commodity needed gains of about 57 percent, as you can see with platinum in the 10-year chart above. In fact, while gold received tonnes of attention last year, its 24 percent returns were only good enough for 10th place.

There are many ways to analyze the data in the periodic table – I’ll share just a few basic observations.

• Of the 140 squares in the table (14 commodities times 10 years), 92 of them contain positive returns – that’s just under two-thirds success covering a range from the spectacular 320 percent up year for natural gas in 2000 down to the microscopic 0.02 percent gain by crude oil in 2006.
• Gold had the most positive years – its streak now stands at nine straight years after a 5.5 percent loss in 2000, when the bullion price dipped below $265, roughly a quarter of the current price. Oil, platinum and silver all had eight positive years during the decade, while nickel had six down years.
• Natural gas had the most extreme swings, finishing at #1 three times and at the bottom twice. One year after recording the biggest yearly gain in 2000, natural gas had the worst single-year loss – minus 74 percent.
• Aluminum and silver had the least relative volatility and the most years hovering around the middle. Even in their best performance year (2009), both were in the bottom half – silver at #8 and aluminum at #9.

We believe that the secular bull market for commodities and natural resources stocks that began in 2000 is far from over. The International Monetary Fund believes that commodity prices will rise further in 2010 as a result of global economic recovery and escalating demand from fast-growing emerging markets.

The expanding middle class in China, Brazil and the other biggest emerging economies want more of the material goods taken for granted in the developed world. They are laying claim to a bigger share of the world’s commodities, many of which could face future supply constraints.

History shows that commodity supercycles typically last 20 to 25 years, though not without periods of volatility. If the current cycle follows the historic pattern, we could be just starting the second half of a prolonged upward trend.

[View the Complete Interactive Table]

Tags: Brazil, Bullion Price, Chief Investment Officer, China, Commodities, Commodity, Crb Index, Crude Oil, Emerging Markets, energy, Frank Holmes, Gold, Gold Bullion, Headline News, Industrial Metals, Jefferies, Natural Gas, Natural Resources, nickel, oil, Palladium, Periodic Table, Price Oil, Reuters, Rock Bottom, Squares, U S Global Investors, Zinc
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Is Copper The New Precious Metal?

Saturday, January 2nd, 2010

Copper soared this week in London and New York, striking a new 16-month high, and headed for the biggest annual gain (140%) in more than two decades, as traders fretted about possible strikes at Codelco’s giant Chuquicamata mine may disrupt supplies from key producer – Chile. (Fig. 1)

Defying the Dollar

The dollar remained strong against the yen and other key rivals, but copper took its cue more from the looming strike as well as the better than expected Chicago PMI. As such, the rebound in dollar had little impact on copper (as well as other industrial metals) on confidence about the bull-run into 2010, thanks mostly to speculative buying.

So far, the red metal has more than doubled this year, leading gains in the CRB Index of 19 raw materials, and climbed almost fourfold in the decade as consumption rose in emerging economies including Chindia.

However, despite the improving global economic backdrop, there is far from a consensus on how copper will fare throughout the next 12 months.

2009 – Beyond Reality

Despite its red hot streak in 2009, copper’s continuous rally in the face of swelling inventories, a sign of weak consumption, has perplexed many in the market. Stockpiles and production worldwide have steadily increased this year alongside with copper prices. (Fig. 2)

The latest data showed London Metals Exchange (LME) stocks rose 6,375 tons to above 500,000 tons, their highest level since April. Furthermore, the almost 600,000 tonnes in LME and Shanghai exchange warehouses are enough to cover the lost output from strike at Chuquicamata for more than a year.

Copper A LA Gold

China’s unprecedented $585 billion infrastructure-focused stimulus package and strategic stockpiling efforts have had a major impact on copper prices this year. This is evidenced by the 165% year-over-year surge of China’s imports of refined copper to 2.58 million tonnes in the first nine months of 2009.

On that note, the market has looked beyond warehouses. Some even say copper is behaving more like gold rather than strictly a base metal. (Fig. 3)

Of course, a number of other factors such as an anticipated global economic revival, new investment cash, index/fund buying, a weaker U.S. dollar, concern over labor disruptions, have also contributed to overshadow bearish indications of the copper inventory build-up.

Copper Currency Standard?

While India is trying to accumulate gold reserves, China is going one step forward by buying up industrial metals on a scale that appears beyond the usual commercial reasons. Some believe Beijing may have made a strategic decision to stockpile metal as an alternative to US Treasuries and dollar holdings as it safeguards China’s industrial revolution, while the West may one day face a supply crisis.

Speculation of an ultimate “Copper Standard” also swirled when in March, 2009, Zhou Xiaochuan, the governor of People’s Bank of China, reportedly called for a world currency modelled on the “Bancor”. The Bancor was to be anchored on 30 commodities – a broader base than the Gold Standard.

Copper “The Red Gold”?

Meanwhile, India’s $1.2 trillion economy expanded 7.9% in the 3rd quarter of 2009, the quickest pace in six quarters. The growth lagged behind only China among the world’s major economies with equally strong demand from auto and power sectors. Copper demand in India is expected to soar by 6% next year, in line with the GDP growth forecast of 7%. .

As China and India each is looking to compete and develop their economies together, India could step up their copper buying efforts as well. Then, currency standard or not, copper could become the ultimate red gold as a strategic asset as well as an inflation hedge.

Electric Avenue Will Take It Higher

China is expected to expand 8.5% this year, according to the median estimate of economists surveyed by Bloomberg. Urbanization plus the next industrial revolution led by hybrid cars need plenty of copper. China plans to boost its annual production of electric or hybrid cars to 500,000 in the next two years, up from 2,100 last year. Such a shift would require huge amounts of electrically conductive copper.

Technically Bullish

Copper prices are still off their all-time high of $8,940 on LME notched in July 2008, before the global economic downturn caused markets to tumble.

Most of the technical signals for copper (Fig. 1) are very bullish, albeit a bit over-bought on some indicators like RSI & Bollinger Bands. But since the market just put in a new high, it may continue to become more overbought before corrections may occur.

Right now, it looks like the $7,500 to $7,600 levels should be the next resistance with potential retracement towards $6,500 and $5,800 levels. But if Western recovery continues to disappoint, or remain mixed, as they currently are, then we could see prices revert back to between $5,000/t to $6,000/t in 2010.

Chinese Copper Control

China is the world’s largest copper consumer with about 38% market share, and its record levels of copper imports this year has made up for some of the slack demand in the U.S. and Europe. Copper, the hottest among the base metals, is controlled mostly by China as the single largest buyer in the world.

Now, some market participants say imports of refined copper into China may not reflect demand for at least the next six months, or longer, as China digests stocks built this year as a result of record imports.

In addition, China Daily reported on Nov. 12, 2009 that copper stockpiles held in duty-free warehouses in China may be re-exported after surging to as much as 350,000 tons from almost none at the start of the year. The country’s imports of refined copper may lower to 1.6 million tons in 2010. However, the 350,000 tons reportedly belong to mostly private speculators and account for a fraction of the total imports.

Clearly, there is some copper supply/demand imbalance in China as the country is not entirely immune to this synchronized global recession.  However, with copper price doubling up in 2009 and as China generally prefers buying on the dip, this re-export could also be a strategic tactic of Beijing in an attempt to push down the prices of copper.

2010 – Reality Bites

The general “recovery trade”, predicated primarily on China and other emerging economies infrastructure and industrial growth,

Tags: Chicago Pmi, China, Commodities, Copper Metal, Copper Prices, Crb Index, Economic Backdrop, Emerging Economies, Emerging Markets, First Nine Months, Gold, Hot Streak, India, Industrial Metals, Inventories, Key Rivals, Lme, London Metals Exchange, Metal Copper, Precious Metal, Raw Materials, Refined Copper, Stimulus Package, Stockpiles, Tonnes, Warehouses
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One Indicator the Government Can’t Ignore

Tuesday, October 27th, 2009

Adam Hewison, of INO.com/MarketClub, says the CRB index is one of the most valuable economic indicators.

“There is an indicator which has been around since 1957. It has accurately forecasted every inflationary and deflationary cycle since.

I believe that this is the indicator that everyone should watch. If you trade stocks or futures and are interested in world trade trends, this is the indicator to track.”

Click here or on the image to view it:

Tags: Advertisement, Crb Index, Economic Indicator, Economic Indicators, Futures, Image View, Ino, Marketclub, Trade Stocks, Trade Trends
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