The Doctor Is In?

On the contrary (back to UBS on last time):

The copper price rallied during Q4 to an 8-year high of US$3.50/lb. This appears to be partially ahead of the fundamentals, driven in part by speculative buying.

In other words, classic supply bottleneck further amplified, as all these commodity commentators have noted, by the “money printing” speculators looking for something other than Bitcoin (also 2017 again) to insure against what they’re led to believe is a looming inflationary breakout.

Not even the metals producers – here or anywhere – think this is the case. Or if they do, they curiously aren’t moving very quickly to take advantage, being hindered by the very thing which, like 2017 into 2018, had thwarted the last inflation hysteria. In fact, they aren’t moving much at all which is really the entire point here.

With earlier copper hoarding expected to unwind over the months and year ahead, even the most demand-optimistic of these commodity watchers is expecting a modest pullback in the price during 2021. And these are mainstream Economist projections. Not to mention what’s actually going on in China, and it’s not massive “accommodation” by any stretch.

Supply constraints rather than Jay Powell’s name are all over Dr. Copper’s prescription pad. Thus, copper versus gold isn’t actually a direct comparison. Not yet, anyway.

 

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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