The Great Copper Crash of 2012 - Global Market Comments
Global Market Comments
Macro Millionaire Featured Trades:
(GET READY FOR THE FINAL FLUSH IN OCTOBER),
(SPY), (SPX), (USO), (DBB), ($SSEC), (IWM),
(THE GREAT COPPER CRASH OF 2012), (CU), (FCX),
(SINGAPORE STRATEGY LUNCHEON)
From the desk of John Thomas
The Mad Hedge Fund Trader
Friday, September 30, 2011
The Great Copper Crash of 2012.
When Dr. Copper (CU), the only commodity with a PhD in economics, suddenly collapses from a heart attack, risk takers everywhere have to sit up and take notice. Since the July top, the red metal has collapsed a shocking 31%.
So called because of its uncanny ability to predict the future of the global economy, copper is warning of dire things to come. The price drop suggests that the great Chinese economic miracle is coming to an end, or is at least facing a substantial slowdown. This dark view is further confirmed by the weakness in the Shanghai index ($SSEC) which plumbed new depths this week. Will China permabear, Jim Chanos, finally get his dream come true?
It’s a little more complicated than that. Copper is no longer the metal it once was. Because of the lack of a consumer banking system in the Middle Kingdom, individuals are now hoarding 100 pound copper bars and posting them as collateral for loans. Get any weakness of the kind we have seen over the past two week, and lenders panic, dumping their collateral for cash.
The high frequency traders are now in there in force, whipping around prices and creating unprecedented volatility. You can see this also in gold, silver, oil, coal, platinum, and palladium. Notice how they seem to be running the movie on fast forward everywhere these days? Because of this, we could now be seeing an overshoot on the downside in copper which may never actually materialize to this extreme in equities or other asset classes.
Watch Dr. Copper closely. At the first sign of any sustained strength, you should load up on long dated calls for Freeport McMoRan (FCX), the world’s largest producer, which also has been similarly decimated.
Is the Fat Lady About to Sing for “RISK ON” Assets?
I just wanted to really thank you doing all that you do. I love your analysis and how you view the world. I am a private investor and have my own views and approach to investing, but more and more I am finding that your insights and style are sharpening my skills making me a much better investor.
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Come Join Me for Lunch in Singapore on Tuesday, October 18.
Come join me for lunch at the Mad Hedge Fund Trader’s Global Strategy Update, which I will be conducting in Singapore on Tuesday, October 18, 2011. A multicultural vegetarian meal will be followed by a wide ranging discussion and a 60 minute question and answer period.
I’ll be giving you my up-to-date view on stocks, bonds, currencies, commodities, precious metals, and real estate. I also hope to provide some insight into America’s opaque and confusing political system. And to keep you in suspense, I’ll be throwing a few surprises out there too. Tickets are available for $265.
I’ll be arriving at 11:00 and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets.
The lunch will be held at a private club in downtown that will be emailed with your purchase confirmation.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my online store and click on “luncheons.” The Singapore lunch will be on page 2.
Quote of the Day “The volatility Index (VIX) is the one thing in the room that is not lying right now,” said Chris Johnson, CEO of the Johnson Research group.