By Jim Williams
Groundhog Day is tomorrow. The time when meteorologists across the country put aside science and put their trust in a big rodent named Phil to predict the forecast for the next six weeks.
Copper forecasters are not as lucky. They can’t predict today, much less six weeks from now! That being said, copper continues to climb, hitting a nine-week high during yesterday’s trading.
Contributing factors to the continued upward climb are a weaker dollar, solid oil prices, a looming strike at a copper mine in Chile and, despite being out to celebrate the New Year, manufacturing news out of China.
The U.S. dollar index was sharply lower yesterday. As you may already know, when the dollar dips, the corresponding values of hard assets – copper being one, along with gold and silver – typically rise. The price of oil also tends to flow the same as copper. The latest report sticks to that theory, as oil prices are solidly higher.
A hike in red metal prices was also supported by news of a pending workers strike at Chile’s Escondida Copper Mine, the world’s largest. Reports early this morning say 99% of union workers at Escondida voted in favor of going on strike. Barring an 11th hour miracle, the strike could start as early as Monday. That could have a domino effect as 15 other copper mines in Chile are up for contracts renewals as well. News of the pending strike sent prices on the London Metal Exchange over $6,000 a metric ton.
If a strike – or, strikes – happens, that could put a big dent in copper supply, and drive the price even higher.
Investment company Angel Commodities predicts copper will likely “trade sideways” today as Chinese manufacturing activity continued to be in expansion mode in January at 51.3, indicating economic stabilization. So, China is still a factor, despite the country taking the week off to celebrate the New Year.
We will continue reporting on the price of copper and see if we can keep you ahead of the curve – shadow or not!
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