Pinch me, I Must Be Dreaming
Metals Roared Last Week As Silver Gained Nearly 10% & Copper Gained More Than 8%
Yesterday’s market action was a “pinch me, I must be dreaming” moment for metals investors; gold was up more than 1%, copper nearly 4%, and silver nearly 5%.
Gold (Daily)
Copper (Daily)
Silver (Daily)
While gold has been the leader in this metals bull run so far, copper & silver took over the reins last week. Copper has risen 6 of the last 7 weeks, and the red metal closed at a new all-time high weekly closing price:
Copper (Weekly - 3 Year)
Gold’s rally to above $2,400/oz has occurred amid relatively little fanfare, however, we are beginning to see copper get some headlines. Matthew Heap, a portfolio manager at Orion Resource Partners stated last week:
“While there were a lot of western funds that missed out on the gold rally, it’s clear that they’re very eager to participate in copper. That reflects the fact that, thematically, there’s a very clear story to tell for copper, and you can explain in an elevator ride why prices are likely to rally substantially higher from here.”
Copper has received some attention in financial media in the last week, it was also an important topic at Metals Investor Forum in Vancouver:
Jeff Currie On Why Copper Is His Highest Conviction Trade Ever
Craig Parry of Vizsla Copper Corp. talks to Robert Sinn at Metals Investor Forum | May 2024
Mr. Parry certainly got my attention with his “$20-$30 copper within the next few years” call at MIF.
There is no doubt that sentiment has turned decidedly bullish on metals in recent weeks. However, I’m still not sensing outright euphoria. That could be coming soon, though.
The Daily Sentiment Index for silver reached 90 as of Friday’s close, but copper and gold are still lagging behind in the 80s. Bullish sentiment is what makes a bull market. So far, during the recent bull run every time the metals were bordering on becoming silly overbought they proceeded to pause and cool off for 1-2 weeks. We will have to see if we are about to get some sideways cooling off action next week.
We are currently witnessing unprecedented dislocations in physical copper markets with smelter treatment charges moving into negative territory:
This means that smelters in China will pay $2.60 per tonne in order to have the luxury of processing copper concentrate. This is the first time since at least 2013 that this TC/RC Index has moved into negative territory.
While such an extreme short term dislocation will likely prove to be unsustainable, this is a strong indication of what is to come as global demand for copper continues to increase.
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