Uncategorized
Share this news article...
Share on LinkedIn
Linkedin
Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on Google+
Google+
Email this to someone
email

Gianni Kovacevic – “Trade War Sabre Rattling: The Impact on Commodities (& Especially Copper)”

 

 

 

 

 

One year ago, on July 19th to be exact, I delivered a keynote on the modern energy pivot to a global gathering of Cable and Wire Manufacturers. At the end of the talk I asked the audience of approximately 200 Senior Executives if they felt the price of copper would trend higher or lower from the ~$2.65 /lb it was on that day. The sentiment was almost unanimous that prices were going higher in the future. . 

 

 

I then asked members of the group (for my own curiosity) why then are the makers of cable and wire – the biggest users of the red metal – not more aggressive in absorbing extra quantities – now – rather than waiting and potentially paying higher prices in the near(ish) future? It was already accepted that commodities exited their bear market with the surprise election victory of Donald J. Trump.

 

 

View the 1 year chart on copper with emphasis on July 19, 2017.

 

 

 

Trade War Sabre Rattling Is Not Good For Raw Materials

 

 

All this talk of trade war is having an impact on investor sentiment. This echoes into the long term thinking of any business owner/manager, no matter if one considers a small mom and pop shop or the likes of Pirelli, Mitsubishi or Southwire. Imagine if millions of end users stockpiled just a little bit less of whatever raw materials they needed due to uncertainty in the future sales in their business? 

 

 

I believe that is exactly what is going on right now – and it makes practical and prudent sense. The hand-to-mouth mentality that is impacting most raw materials can only last so long – life will go on – someone will need to make the widgets and gizmos, industry will eventually re-calibrate by whom and from where. 

 

 

Is a recession now inevitable?  Will various PMi’s fall below 50 in the coming weeks/months? As these things manifest themselves, does that force Trump to change tack? 

 

 

For now, traders can make a fortune as selling begets selling into thinly bid summer vacation commodity markets,  exacerbated by hand-to-mouth raw material buying. When the tide turns, it will be these same participants who flip the trade and it will be fuelled by the millions of real end users who aim to secure longer term supplies.   

 

 

As an investor, I continue to take the medium to long-term view that there already exists a complete disconnect between asset prices and copper prices.    

 

 

Posted July 7, 2018

Share this news article...
Share on LinkedIn
Linkedin
Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on Google+
Google+
Email this to someone
email

MORE or "UNCATEGORIZED"


The Week of July 9th to July 15th, 2018 “A Brief Look Back into Tomorrow”

The new North American trading week began of Monday, July 9th wit... READ MORE

July 16, 2018

Lundin Mining Announces Intention to Make All Cash Offer to Acquire Nevsun Resources Ltd.

Lundin Mining Corporation (TSX: LUN) (Nasdaq Stockholm: LUMI) ann... READ MORE

July 16, 2018

Colibri Resource Corporation - Intersects 61 metres with an average grade of 0.75 g/t Au - Including 1.5 meters of 17.3 g/t Au

Colibri Resource Corporation (TSX-V:CBI) wishes to an... READ MORE

July 16, 2018

ALLEGIANT Closes First Tranche of $4.95 Million Private Placement

Allegiant Gold Ltd. (TSX-V:AUAU) (OTCQX:AUXXF) is pleased to anno... READ MORE

July 16, 2018

Aben Intersects Mineralization Early in Drill Program at Forrest Kerr Project in BC’s Golden Triangle

Aben Resources Ltd. (TSX-V:ABN)(OTCQB:ABNAF) (Frankfurt:E2L... READ MORE

July 16, 2018

Copyright 2018 The Prospector News - Site design by Spyderbaby Productions