-- Posted Wednesday, 22 October 2008 | Digg This Article
| Source: GoldSeek.com
GENERAL MARKET CONDITIONS/FUNDAMENTAL FACTOR
Are base metals worth investing for a long time?
Most of the base metals have fallen over thirty percent over the year. Aluminum has fallen least while nickel has fallen the most among the base metals. Even the invincible copper has crashed in the past two months. Base metals and industrials are dependent on global economic growth, particularly China. 2008 Chinese GPP growth is expected to be the slowest in the past five years to 9.50%. China has been the biggest consumer of base metals. If there is further evidence of a slowdown in Chinese growth in the rest of 2008 then base metals can get further hammering.
LONDON METAL EXCHANGE (LME) |
| LTP | % CHG | 12 mth % | YTD % | 50 DAY MA | 100 DAY MA | 200 DAY MA |
LME | | | | | | | |
COPPER -- CASH | 4490.00 | 0.00 | -43.81 | -32.75 | 6662.91 | 7458.80 | 7811.79 |
COPPER -- 3 MONTH | 4395.00 | -1.90 | -44.68 | -34.35 | 6525.98 | 7305.01 | 7706.23 |
ZINC -- CASH | 1135.50 | 0.00 | -62.71 | -50.41 | 1628.76 | 1741.32 | 2034.63 |
ZINC -- 3 MONTH | 1160.00 | -0.85 | -60.74 | -50.85 | 1646.52 | 1759.05 | 2057.93 |
LEAD -- CASH | 1336.00 | 0.00 | -64.83 | -47.24 | 1769.08 | 1848.13 | 2296.29 |
LEAD -- 3 MONTH | 1350.00 | -1.82 | -62.96 | -46.95 | 1764.17 | 1846.69 | 2297.42 |
NICKEL -- CASH | 10450.00 | 0.00 | -67.04 | -59.50 | 16819.30 | 18771.55 | 23415.93 |
NICKEL -- 3 MONTH | 10850.00 | 1.40 | -65.88 | -58.59 | 16788.74 | 18785.58 | 23505.21 |
ALUMINUM -- CASH | 2044.00 | 0.00 | -17.36 | -13.04 | 2479.49 | 2736.42 | 2793.71 |
ALUMINUM -- 3 MONTH | 2055.00 | -1.20 | -18.85 | -14.61 | 2515.84 | 2780.12 | 2843.21 |
The current bear phase in base metals is a part and parcel of a long term bull rally which may last for two to three quarters. Value based buying at lower levels and restocking by end users will ensure that the long term Bull Run continues. The clear picture will emerge only at the beginning of the 2009.
In the short term for base metals to rise the following conditions need to be fulfilled:
- Equity markets rally.
- Liquidity conditions improve.
- Most of the base metals are highly oversold. So a technical bounce can happen anytime while maintaining the bear trend.
- Chinese demand improves. Unless Chinese improves the rallies in base metals will be fake.
- Outlook for 2009 global growth stabilizes.
Silver has risen on a rise in physical demand while gold and energies fell on US dollar gains. Various central banks are taking further steps to calm the negative investor sentiment. There is lack of major market moving news today except for the US weekly crude oil inventories. The US dollar has been gaining on expectations that other central banks will cut interest rates faster than US. This trend may continue for a few more weeks.
COMEX COPPER DECEMBER
Copper needs to hold $195 to prevent a fall to $173. Highly oversold conditions exist. On the higher side copper needs to break $228 to find intra day buyers.
Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Prepared By Chintan Karnani. Website www.insigniaconsultants.in
-- Posted Wednesday, 22 October 2008 | Digg This Article | Source: GoldSeek.com
