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Goldman sees copper rising as deficit looms on supply threat

Discussion in 'Purchasing Precious Metals' started by southfork, Jun 27, 2017.



  1. southfork

    southfork Mother Lode Found Mother Lode

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    So keep saving those pre 82 cents, not to mention silver is a by product of copper mining.

    https://www.moneyweb.co.za/mineweb/base-metals/goldman-sees-copper-rising-as-deficit-looms-
    on-supply-threat/
    Goldman sees copper rising as deficit looms on supply threat
    Barclays, UBS also see potential for prices to climb this year.
    James Poole, Bloomberg / 8 February 2017 14:35
    [​IMG]
    Copper will extend gains as the global market swings to shortage because of sustained demand from China and potential supply disruption at the world’s two biggest mines, according to Goldman Sachs Group. A deficit this year would be the first since 2011, says Citigroup.

    “We expect copper will move into deficit in the coming months, driving the next leg higher in prices,” analysts including Max Layton and Jeff Currie wrote in a report received on Wednesday. While the bank’s six-month target remains at $6 200 a metric ton, risks surrounding the forecast are skewed to the upside, they wrote. The metal advanced 1.5% to $5 884 in London on Wednesday.

    Prices have surged by more than 25% over the past year as demand recovered and investors anticipated higher infrastructure spending and tax cuts from U.S. President Donald Trump. Copper is one of Citigroup’s most preferred metals, while Barclays Plc and UBS Group say higher prices are likely on the back of supply disruptions this year.

    While there are concerns about monetary tightening in China, the moves have been small and are in the context of a credit boom, the Goldman analysts said. The acceleration in demand from the metals-intensive industries of the old economy because of strong credit growth will help create a shortage in the copper market, according to the bank. Prospects for supply disruption at Escondida in Chile and Grasberg in Indonesia increase potential for gains.

    Workers at Escondida vowed to start an indefinite strike Thursday as talks with BHP Billiton failed to produce an agreement following weeks of collective bargaining. In Indonesia, exports from Freeport McMoRan’s mine in Papua province have halted as the company negotiates with the government on the terms under which it operates in the country.

    Freeport may start curbing production if the ban on concentrate shipments continues. “We have a limited amount of storage space and we would need to take steps no later than mid-February,” chief executive officer Richard Adkerson said on a conference call last month.

    Barclays has forecast a surplus of 39 000 tons this year, assuming 5% of worldwide primary production of 20.7 million tons is lost to disruptions. A stoppage at Escondida would remove about 24 000 tons a week, potentially pushing the market into a deficit, the bank said last week.

    UBS sees supply disruptions increasing in 2017 from last year and forecasts prices to average about $6 600 a ton, according to Sydney-based analyst Daniel Morgan. Citigroup sees a global shortage of 59 000 tons this year.

    © 2017 Bloomberg
     
  2. solarion

    solarion Gold Member Gold Chaser

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    So looks like copper has done alright for itself over the past 4 decades or so...keeping up with the debasing of the dollar.

    http://www.macrotrends.net/1476/copper-prices-historical-chart-data

    Totally unlike that white "precious" metal often found as a by-product of copper mining...that crap isn't even worth nearly what it was in 1980. Must be annoying for copper miners to have to toss that silver crap out of their way to get at the valuable copper.
     
  3. ttazzman

    ttazzman Midas Member Midas Member Site Supporter

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    best physical copper play in my opinion is 250' rolls of 12-2 romex...
     
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  4. Someone_else

    Someone_else Gold Member Gold Chaser

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    That's a very insightful point. There are many ways to invest in commodities, but I think the safest will be those closest to the end user. Just like you could buy lead futures, or you could buy lead bullets ready for reloading.
     
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  5. edsl48

    edsl48 Silver Member Silver Miner

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    Home Depot here will give full refunds up to 90 days if you bought your romex and then the market went down.
     
  6. D-FENZ

    D-FENZ Gold Member Gold Chaser Site Supporter ++

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    With new wire, depending on your state's sales tax rate you can lose a large percentage right from the get-go. And unless you have a ready outlet for it, it could be difficult to move when you're ready. Few electricians will be willing to buy it on the grey market from a random seller out of a pickup or car trunk. And they don't like paying cash. They need the tax write-off and a traceable supply chain for shifting liability should something go wrong.

    Collecting early copper pennies is fine but tedious and small-ball when you're talking about under 3 bucks a pound. And I'm not sure if the market for pennies responds well to price changes in the underlying copper price. Copper Ron Paul tokens? Good luck.

    I prefer scrap in any of it's forms. Liquidity and the buy/sell spread is key here. Most scrap yards work on a buy/sell spread of around 10 cents per pound. Scrap yards are in nearly every local area and are always buying and selling. And the prices respond daily to the underlying copper market. It depends on state regulations but in most states, scrap is not subject to sales tax and many dealers deal in cash if you prefer. If yours does not you may have to travel a bit but seldom more than a couple of hours to a friendlier location. Do your research. Familiarize yourself with the various grades- bare-bright, number one, number two, number one and two insulated etc.- and get on the phone. Buy and sell by the pound or by the ton, your choice.

    DYODD but for now, copper prices are headed north. It broke $3 on the front month futures yesterday and look to be heading to the $3.25 area soon. https://www.barchart.com/futures/quotes/HGU17/interactive-chart
     
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  7. edsl48

    edsl48 Silver Member Silver Miner

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    Scrap is an excellent idea if you have the room for it. I know a lot of construction workers with a lot of garage area storage dedicated to scrap copper. However in the meantime a 60,000+ pickup sits out in the weather at the same time.
    On Romex my local Home Depot and Lowes are highly competitive on 12-2 romex and tend to move pretty quickly on the upside regarding copper prices. With a 90 day return policy (up to 6 months unofficially at my store) one can play the game at no risk.
    Actually one might just play the paper game for speculating on copper prices based upon copper prices per pound. One would need a very big truck to really garner some serious profits
     
  8. ttazzman

    ttazzman Midas Member Midas Member Site Supporter

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    Scrap buying and selling would certainly work....as far as romex wire or copper plumbing pipe it readily buys/sells on the local Craig's list.....
     

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