they are playing with us, page-11

base metals review Copper price is near its low ...... technos overshooting IMO. Near term low is picked at 2.80 by the gurus. One mentioned why would anyone want to do a 26 billion buck deal if they thought Copper was at its cycle end?

Hot LEAD is only WARMING its engines.

Long term there aint enough resources to go around. Reckon we are currently in mandatory 8-count ie "B" wave retrace (since May) ahead of an explosive "C" megawave in resources as the flood of worthless USD comes back to haunt the printers........that will be the INFLATIONERY push component of stagflation.

IMBOOC

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Consider the stock positions for base metals
By: Charles Carlisle
Posted: '19-NOV-06 12:00' GMT © Mineweb 1997-2006



LONDON (Mineweb.com) --Although the metals stocks held in commodity exchange warehouses only represent marginal supplies, with most metals supply passing virtually directly from refinery to consumer, the stock positions in the warehouses tend to be, nonetheless, an important guide to potential price movements.

However, just because stocks of what might be termed the most significant base metal, namely copper, appear to be rising, it doesn’t mean that the other base metals will follow suit. Upwards stock movement is not necessarily an indication that demand is falling, but in copper’s case that some of the malaise which had been afflicting the production sector, is currently falling away. Major strikes have ended, and the threat of new ones is receding, meaning that consumers may themselves be destocking as they see supplies remaining steady and with thus less need to maintain their own inventories against prospective supply shortfalls in the immediate future.

What seems to have happened in the metals market recently is that copper warehouse stocks have been climbing, the copper price has fallen as a result and this has dragged down the prices of the other base metals too. This is not necessarily a sensible reaction by the market. But then when have market movements always followed logical patterns.

Take zinc, for example. Stocks here have been declining steadily for two years, and are continuing to fall. They are currently at what could be termed critical levels – and still falling. In general, as the stocks have been falling, the price has been rising, with the occasional hiatus as in the past couple of weeks. If stocks continue to fall – and the reduction has been pretty steady for the last 20 months – then it seems likely prices will once again rediscover their upward path – and if stocks decline to almost zero, which is possible if the fall continues at its current rate for another two to three months, the price rise could then be quite steep for obvious psychological reasons.

Zinc’s sister metal, lead, has also seen its stocks decline almost non-stop for the past six months, but a recent upturn, which now seems to have ended, has seen the metals price come down a few notches. But the resumed fall in stocks has not yet seen a corresponding rise in the metals price. This may well be due.

Nickel stocks have also been falling, although there has been a recent small upturn followed by a flat patch. But stocks here are still critically low and with the continuing industrial unrest in New Caledonia, which is continuing to impact supplies, the recent falls in the metal price may also not have been justified.

Aluminium has also seen stocks fall, but the metal is really a slightly different animal from the other base metals with much of supply and the demand being in the hands of vertically integrated companies, so price does not necessarily follow the same kind of pattern as the others.

This returns us to copper where stocks recently have been on the up, and the price has been falling as a result due to confidence coming back to the consumer market in the continuity of supply.

What the above may demonstrate, though, is that prices overall tend to move inversely to the stock levels. If you look at stock trends and they are falling, then the chances are prices are rising, and vice versa. The excellent kitcometals.com website carries historic charts for all the major base metals and the general correlation between stocks and metals prices can readily be seen. If you follow these patterns in metals investment – and in related mining stocks – you probably won’t go far wrong.