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LME Copper Stocks Continue to Fall


Despite ongoing very bullish Goldman views toward copper, the market is tracking lower this morning. In fact, Goldman analysts indicated the world copper market could see a “stock out episode” with global inventories in the fourth running extreme low. The market is also not benefiting from bullish intermediate and long-term industry forecasts from mining giant Antofagasta. However, the trade did see fresh bearish supply side news from Indonesia where the government is expected to extend export licenses for copper concentrate even though the actual volumes are yet to be determined. In another supportive development for long-term bull views another mining executive yesterday suggested mergers and acquisitions within the copper space would not cure the looming shortage. Even though the copper market has benefited from extensive speculation of long-term tightening of global supplies, the bull camp was given an added boost yesterday following comments from a famed investor/manager suggesting world supplies of copper will become very tight in the future. Furthermore, LME copper warehouse stocks continue to fall at a brisk pace and are beginning to become a material supportive force.

copper cylinders


With the US dollar posting a four-day high overnight and the bias shifting slightly back toward a hawkish vibe, the bias in gold and silver is down to start today. Furthermore, the gold market remains under residual pressure from news yesterday that PBOC gold buying last month slowed perhaps because of the unending record price run. However, the Peoples Bank of China extended its record of 18 straight monthly additions to reserves with a very minimal purchase of 60,000 ounces which is down 100,000 ounces from March and a very explosive 390,000 ounces below February. On the other hand, gold ETF holdings saw an unusual inflow of 39,016 ounces yesterday but year to date holdings have declined by 5.7%. The bull camp should be discouraged with the lack of strength in gold and silver prices yesterday after getting word of the beginning of the Israeli attack on a southern Gaza city. However, the attack was widely anticipated, and the US dollar was offering spillover pressure to gold, silver, and many physical commodities yesterday. Going forward, the bear camp looks to maintain an edge as flight to quality interest is apparently not waiting in the wings.


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