Copper: Is it all just a bubble or is there substance behind it?
Chinese demand for copper, real estate, or other assets depends at the margin on the availability of credit. The increases in credit are being reduced by well-publicised state policy. Copper has become a way to bet against that policy. Bad idea.
There is a price decline coming soon, whether or not there is a long-term bull market. Some people will make sure they sell before that happens. They care about profits, not documenting why everyone else was making the same mistake.
Fascinating article.
Stag,
ReplyDeleteSo far anyway, it looks like Bernanke has succeeded in quantitatvely easing the pain of the oil and metals producers. Woohoo!
The CONsumer hasn't gotten much relief though. It appears we are still "waging" a war on earned incomes.
From the article:
ReplyDelete"These people, no longer with us thanks to the efforts of the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the UK's Financial Services Authority, would also manipulate industry data to mislead the public about the prospects for a given company or industry. Then they would sell their own long or short positions to the deceived retail or institutional investors."
Umm, they are gone????? Thanks to the SEC? I am still laughing.
mab,
ReplyDeleteSo far anyway, it looks like Bernanke has succeeded in quantitatvely easing the pain of the oil and metals producers. Woohoo!
That's the spirit, lol.
GYSC,
ReplyDeleteThey are ALL gone. Absolutely. Every last one of them. No deceit these days. Everything is on the up and up.
Didn't you get the memo? ;)
Mab said:
ReplyDelete"...quantitatvely easing the pain..."
"Ease his pain" in a commodity 'Field Of Dreams'.
: )
And don't forget, we need to "go the distance".
ReplyDeleteMab and all,
ReplyDeleteI think the real money metals (Au/Ag) may be even better off due to Bernanke soon:
That simply does not make any sense. But it is right there in black and white on the Federal Reserve's own website....
The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.
http://tinyurl.com/yfkv5nc
Logical next extension I guess.
GYSC,
ReplyDeleteReal money metals and real commodity metals are all just shiny rocks to me.
If I must own one, then I at least want to own a cheap one. Gold and silver have both quadrupled in price over the last decade. I have no interest in owning them if I can't get excited about their base metal counterparts and/or adding to my toilet paper hoard.
I know. I know. Stagflationary heresy.
watchtower,
ReplyDeleteLooks like I'm "going the distance" with my deflationary stance.
As a further sign that I'm not all that worried about hyperinflation in the short-term, I've been waiting to buy the original Star Trek series on blu-ray.
Amazon dropped the price again this month. The longer I wait to buy, the cheaper it seems to get.
Yes, they are all the same I know.
ReplyDeleteI hope everyone isn't counting on me to prop up our government's fiscal situation.
ReplyDeleteI'm having my taxes done tomorrow so I put all my paperwork together.
It looks like my tax refund will exceed the amount I actually owed this year. That's a first.
I pay estimated taxes quarterly. I have my money mostly in inflation protected treasuries. Inflation was mostly absent though.
The seasonally adjusted CPI-U peaked on July 2008 at 219.102. As of today (18 months later), it's just 217.587.
Stag,
ReplyDeleteKnew it:
http://www.reuters.com/article/idUSTRE62G50F20100317
"My assumption is the mortgage backed securities which are already outstanding will be grandfathered and will retain the U.S. government backing that they currently have," Bernanke told lawmakers on the U.S. House Financial Services Committee.
"At some point there will be a change in the structure and there will be no more of the current type of MBS created. But the existing MBS I assume will be protected until such time as they either expire or are purchased back," Bernanke said in response to a question about the future of Fannie and Freddie.
What's the major asset on the Fed's balance sheet again?
mab,
ReplyDeleteWhat's the major asset on the Fed's balance sheet again?
I'm going to suggest the answer is Ben Bernanke. He's like the princess and the pea all balanced up there.
Somewhere, deep down below him, is the tiniest of MBS peas. You can't see it. I can't see it. He can feel it though. I'm almost sure of it! ;)
Just had my taxes done.
ReplyDeleteLast year, I expected to be paying roughly $10,480 in taxes this year. It was a bit tough to estimate since most of my money sits in inflation protected US debt.
I ended up paying just $1,994.
It's pretty clear why the government doesn't like deflation.
I have no complaints. Here's to another non-hyperinflationary year.
Cheers!
Here's another copper story for the skeptics.
ReplyDeleteCopper Declines on Dollar’s Gain, Concern About China Demand
March 18 (Bloomberg) -- Copper in London fell as the dollar rose and because of concern that the outlook for demand from China, the world’s largest user, may not justify recent gains.
If China is so intent on constructing empty buildings well into the future, perhaps they could replace the expensive copper wiring with common household string.
AT&T - Can and String [1984]
Hey. I'm just trying to be helpful.