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  • mirzaotovic mirzaotovic May 26, 2012 4:52 PM Flag

    Mirz - copper

    I'm not sure about Copper Mountain. I only follow FCX and SCCO. and the etf COPX. If you don't want the risk of a single stock, then go with COPX. It's a basket of copper producing stocks.

    As far as Copper is concerned. Check a Copper chart and then overlay it with a chart of the EURO. There was 90% correlation until about 4-5 months ago. When copper diverged from the Euro. Is now lagging the EURO but following it down. and if Copper breaks below €1.25. Which it will
    Look for Copper to break below $3.20
    Copper is traded in US dollars. So higher dollar = doesn't benefit Copper
    VERY BEARISH

    What's next?
    Look at the LME, COMEX, SHANGHAI and WORLD Inventories.
    World and LME inventories are at 5 year lows. At about 12 x world daily demand. That's low. And THAT'S VERY BULLISH

    But shanghai inventories are at 2 year highs = China won't be buying much copper anytime soon. They will use their inventories and not buy on the open market. Therefore, force copper lower. VERY BEARISH
    As they are the biggest consumer of copper in the world. Also, lower growth
    forecast for china should pull copper down to maybe $2.85 to $3.20 range.
    VERY BEARISH

    there are a few major miners having issues with unions in Chile and Peru. Negotiations are due in August. Strikes are likely as the governments are likely to support the local unions and their own political interest. Miners are going to sacrifice production because STRIKES will push copper prices and they know it. VERY BULLISH FOR COPPER. this will likely happen in August and september.

    So what do you do?
    I say wait patiently. For now. Let copper drop below $3.40
    Let the Euro drop below €1.25 and then wait to see what happens at €1.20 the lows from the original Greek crisis. Actually the level is €1.18
    By the time the Euro hits €1.20 you should have the Greek vote. June 17th
    Then what???
    Greeks vote for non-austerity party. Euro goes lower. Crisis intensifies and Copper goes down to $3.20 to $2.85 and it's almost July
    Copper going down hard and copper miners on a tailspin. You sit on your hands. Waiting for word on the UNION STRIKES IN CHILE, PERU, and MEXICO. the moment you see those headlines you HIT THE BUY BUY BUY BUTTON. FCX is the best bet. 90% correlation to copper. + high beta stock so it will move up quick. Huge short covering squeeze.

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    • Dave & Golf

      I need you pesants to see this post.

      This is before the Euro drops and Copper was up
      These type of calls are before the fact.
      While you two simpletons are buying the dips I was shorting them. Try and deny these calls. You plucking simpletons.

    • Well that is interesting Mirz, thanks for the detail, and more important - timing because as you say stagflation requires capital preservation and that requires not bad timing... Anyways, on another note, given that the Euro is going downtown, would that mean that the next little while is going to be bad for silver and gold as well since they are valued in dollars which will be on the rise? Whats your take on the commercial silver short contracts on the COMEX hovering around 15K (10 year low - high being 75K) ? Is this a sign that silver is actually bottoming given that the monarchs need not have to control the price nor as much nor are they worried it will get out of hand.

      • 2 Replies to mikebradley27
      • Just like copper diverged from the EURO correlation. So can Silver and gold as money runs back into safety. I do think there is another leg down for Silver but it won't be as big as I originally thought. Probably $25 to maybe $22. Big maybe

        But this theory changes quick w/ the FED ECB EU
        You have to be able to adjust your sights and admit your wrong as the environment around you change. These days the flow of information changes in nano seconds. Not months or days.

        Euro crisis intensifying changed my thought process on silver and that's why I covered at $26
        Otherwise I would have covered 40% of my position at $26 and held the rest down to $19.

      • Just like copper diverged from the EURO correlation. So can Silver and gold as money runs back into safety. I do think there is another leg down for Silver but it won't be as big as I originally thought. Probably $25 to maybe $22. Big maybe

        But this theory changes quick w/ the FED ECB EU
        You have to be able to adjust your sights and admit your wrong as the environment around you change. These days the flow of information changes in nano seconds. Not months or days.

        Euro crisis intensifying changed my thought process on silver and that's why I covered at $26
        Otherwise I would have covered 40% of my position at $26 and held the rest down to $19.

 
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