Weekly Copper And Zinc Inventory Report

I discovered that the Shanghai inventory numbers web page started working again, so I thought I'd start up again tracking these numbers.

Copper is often referred to as Doctor Copper because, ostensibly, it has a Phd in economics. That is, it is a good indicator of the global economy. So, its worth keeping an eye on even if you don't intend to actively invest in it.

So, what can we see from these charts:

1. The London inventory levels have dominated the situation and are ramping up rapidly. This means the world remains in an oversupply situation for both copper and zinc.
2. The Shanghai levels are relatively stable. I guess this means that China is able to gauge how much it needs and produce/ import to match those needs. Overall, this seems to indicate that the LME is what you need to watch and its graphs are available at kitcometals.com.

So, let's take a look at the price action (using kitcometals.com charts) to see how the price of these two metals have fared while the inventories ramp up.

Copper during this recent interval has fallen around 12% from $1.60 to $1.40 having overshot to $1.25 on the way down. Now it appears to be getting ready for a further fall (JMHO).

Zinc has meandered around with a $.50 handle for the last two months.

My perspective is that the global turn-down is just getting warmed up and a lot more production has to be cut off to match supply with demand. I'm expecting the prices of both copper and zinc to stay where they are or go lower to make this happen. I think anything under $.60 for zinc is enough to continue supply shutdown. I don't know what the similar level is for copper. Its pretty clear that nobody is spending money increasing supply with the price at $1.50. So, I'm not short right now as I'm pretty bullish about my Jr gold producers and am happy with their prospects.

MontyHigh, http://www.worldofwallstreet.us/

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