Dr. Copper Is Back in Town


". . .metal price set to at least hold around its recent multi-month highs."

Following heavy selling of listed gold and silver stocks over the past week, among mining subsectors, listed copper miners can claim leading stock price performance over the past 12 months.

Known in some circles as "Dr Copper," in the belief that changes in its market pricing most accurately predicts forward changes in global economic activity, the orange metal now leads forward the best-performing global mining subsector, over the past 12 months, in the form of broadly defined copper miners. The change in the pecking order has taken less than five trading days, a period when investors have heavily sold off, in particular, gold stocks, and even more so, silver stocks.

Gold bullion prices have fallen around USD $45 an ounce in less than four trading sessions, to around USD $946 an ounce. While the investible market value of listed gold stocks aggregates at about USD $261bn, the primary silver sector is a more modest USD $20bn; the number for listed copper stocks is around USD $120bn.

Listed copper miners have shown a remarkable resilience during the so-called global markets crisis, underpinned by a commodity price that bottomed, in December 2008, at levels where the vast majority of copper miners were still making cash profits.

Quoted copper prices collapsed from record levels around USD $4.06/lb in mid-2008 to USD $1.28/lb, and have since soared by 77% to current levels around USD $2.26/lb. Copper made new highs for 2009 this past Tuesday.

The relatively robust standing of copper mining balance sheets has been emphasized by relatively few numbers of capital raisings from copper miners this year; gold miners, by comparison, have used strong gold prices as an underpin for raising billions of dollars worth of fresh capital.

Opinions on the forward possibilities for the copper price remain, as ever, broad and varied. But just as the pricing of listed gold stocks has been saying, for some weeks, that dollar gold bullion prices were likely to shift down, the pricing of listed copper miners points to a metal price set to at least hold around its recent multi-month highs.

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