"I'm bearish across the board in the metals," says Jeff Kennedy, Chief Commodity Analyst at Elliott Wave International. "I'm looking down in gold, down in silver, and down in copper." He lays out his case in the attached video, starting with the precious metals.
Gold and Silver
Kennedy dismisses the muted efforts of gold and silver to regain last year's momentum as classic corrective wave patterns. "Essentially the moves that we've seen the last few weeks, the last few months, are very indicative of a larger down-trending market," he explains.
Once he sees confirming price action, specifically a break below last week's lows in gold, Kennedy wants to get short. The analyst's favorite ways to play the dark side on gold and silver are via the SPDR Gold Trust (GLD) and the iShares Silver Trust (SLV).
The news is no better for copper bulls. In fact, it's much worse if you buy into the idea that "Dr. Copper" is a tell for the rest of the economy. Based on his wave work, Kennedy says copper is heading not just lower, but down as much as 55% to $1.50. This would take copper near lows last seen during financial meltdown of 2008, when global growth crumbled.
Kennedy's favorite short play off copper is Freeport-McMoRan (FCX). The copper and gold miner has the same chart characteristics as copper as well as a specific trigger point for the short. "Take out $30 a share in Freeport," he says, "and nothing's holding it up until you fall to $10."