JH,I find it extremely hard, if not impossible, to believe that...

JH,

I find it extremely hard, if not impossible, to believe that copper prices will decline by 60% over the coming years.

I have read many insto's reports on this subject, and much of the smarter money is forecasting minimal declines in the copper price, with the worst of them forecasting a stabilisation in price of about $US2.50/lb in about 2010. This is after obatining prices of $US3.05/lb and $US2.75/lb over the next 3 years.

Again, the PMH econcomics came out at a red metal price of $US2.24, which is well under what even the "experts" are saying.

I personally share the same view as Barclay's Bank, and they are of the belief that + $US3.25/lb is quite sustainable given the demand and supply environment. Many of the "forecasts" assume minimal supply disruptions from political events, project delays etc... and fail to include reasonable assumptions such as the demand impact of futures trading and ETF's.

When you take into the mix that India GDP grew at 9.2% (which incidentally was a MILE ABOVE EXPECTATIONS), and the fact that the "slowdown" in China which economists are shouting about is occuring at 8.6% yoy, I find it difficult to understand from a pure fundamental perspective how the demand balanced is going to be restored with mines. At the end of the day, the only way supply and demand will be contained is if you do get massive copper mines such as Ann Mason spitting out red metal, which is easily justified based on current copper prices.

Again, we will have to agree to disagree, and I do find your informed logic and opinions as quite useful.

But I am in the game of speculation to make money, and have been doing a pretty good job so far.

So despite what 'some' of the economists think, it is my view to stick to my guns and go with what works. After all, I was being laughed at back in March / April for buying a cr@p load of Aussie dollars at 71cents by our economists here who were calling for it to be at 68 cents by year end. Now look who is laughing.