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No Where To Go But Up…

By Jim Williams

No Where To Go But Up…
The quote in its entirety is, “When you’ve hit rock bottom, there’s no where to go but up.” – Anonymous

OK, so the copper prices are not at rock bottom. They have been lower – just not in the last five plus years. To a lot of investors in the commodity, it is time for the price of the red metal to start going the other way.

Morgan Stanley Predicts a 24% Increase in Copper by End of 2015…
One key player in the financial game is predicting a big upswing in copper. So much so that the price will hit the magical, psychological plateau of $7,000 a metric ton again by the end of 2015. Copper slipped below $6,000 a ton last week, capped by a 6.2 percent drop. But, powerhouse global financial services firm Morgan Stanley sees a 24% rally for copper in its crystal ball of predictions.

If it does in fact increase by 24% that would put copper just over $7k at $7,049. Morgan Stanley released a report on Monday claiming there isn’t any evidence of a collapse for copper. “We remain bullish on the copper outlook,” Morgan Stanley analysts state in the report. “We really are surprised by this latest price move.”

Morgan Stanley backs its bold prediction by saying demand for copper will exceed supply. The bank estimates the refined copper market will be in a deficit of 70,000 to 110,000 tons from 2015 to 2017.

More on Morgan Stanley’s Take…
Here is an interesting article that goes into greater detail on why Morgan Stanley is so confident in copper.

Plummeting Prices Force Layoffs…
The calendar can’t fast forward to the end of the year fast enough for some employees in Canada. The five-year low copper prices have forced a key player in the copper mining business to lay off 45 employees – or 7% of its workforce! Taseko Mines Ltd. announced it is laying off 24 union members and 21 salaried employees at its Gibraltar Mine operation. The layoff also affects about 20 contractors at the mine in south-central British Columbia.

Management at the mine told reporters Gibraltar has been hedging its copper production recently. That means the company has a secure, locked-in purchase price where about 60 percent of their production sells at a rate of $3.00 a pound (copper is currently trading around $2.65/lb). Leaders at Gibraltar say they are “at the mercy of the world economy and world copper prices”. More layoffs could happen if the hedge should expire or copper prices continue to drop. You can read more about Taseko’s Gibraltar Mines here.

In Other News…
When scouring the web for more copper news we came across an interesting column that looks at copper yesterday, today and into the future, and how one company could stand to lose $1 billion if copper remains under $6,000 per ton for 2015. Read the entire article on mineweb.com.

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