Written Commentary
COPPER
We suspect copper is garnering lift from a shift to a slightly upbeat regional vibe in Asia and specifically from a positive Bloomberg story regarding resilient Chinese copper demand. Apparently, Bloomberg thinks record copper production is a sign that Chinese domestic copper demand is resilient perhaps because the Chinese economy is guided by government directives anticipating higher consumption. According to Bloomberg last month, smelting output in China reached a new record at 1.14 million tons which means production has posted two consecutive monthly records. A large part of the increased melter activity is reportedly supplying strong demand for renewable energy materials. Adding into the bullish demand headline flow overnight are predictions from Goldman Sachs last week pegging apparent Chinese copper demand expanding by 10% year to date. Yet another sign of a possible revival of industrial activity in China came from news of a massive Chinese aluminum purchase.
GOLD / SILVER
With a two-day high to low swing in December gold of $38 the gold trade appears to be indecisive with respect to the near-term trend. However, outside market action from the dollar and treasuries has flipped positive which has served to temper long liquidation from the delay of the Israeli ground offensive. Apparently, the IDF has settled on continued bombardment against suspected Hamas strongholds perhaps because of the threat of retaliation from several Arab terrorist groups. Surprisingly, an attack on Iraqi military force by Iranian terrorists/government funded militia has been discounted as inadvertent but the timing of the attacks is suspicious. A supportive demand headline was posted on Reuters this morning indicating that gold has provided a 20% return since the last Indian festival season of Diwali.
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