Ignore the Copper Bears… 

By Matt Badiali, editor, S&A Resource Report

Wednesday, March 27, 2013

Please Enable Images to See this About once per year, the media – and investment analysts who should know better – try to scare the heck out of commodity investors with claims that "copper inventories are soaring."

The thinking is that if copper inventories are rising and near all-time highs, then copper is headed lower… and so are copper-mining stocks.

Today, I'll show you why those claims are wrong. And I'll show you why, counter intuitively, high copper inventories are not a reason to sell your copper miners.

If anything, high copper inventories are a reason to buy copper miners…
When supply hits its peak, the wrong-headed pundits say copper prices must fall. But as we can see from the chart below, by the time supply peaks, the copper price is nearly at its bottom.

In the chart below, the black line represents copper stockpiles stored in the London Metals Exchange (LME) warehousing system. This is the most widely watched level of copper inventories in the world. You can see that this level regularly booms and busts. The blue line in the chart represents the price of copper.

Please Enable Images to See this


It sounds odd to most folks that high copper inventory levels tend to coincide with price bottoms. But that's the nature of the markets. By the time the mainstream press reports on something, chances are good prices will have already factored in the story.

That's why it doesn't make sense to trade in the direction of news headlines. It makes sense to study the numbers and facts.

In this case, the facts are telling us to ignore news articles that cite "experts" who tell you to avoid copper and copper stocks because inventory levels are high. History shows that these high inventory levels tend to mark buying opportunities, not selling opportunities. The one time in 2011 that inventories were high and copper prices declined, the decline was shallow.

This is why I encourage readers to hold on to shares of copper producers like Southern Copper (SCCO) and Freeport-McMoRan (FCX). Yes, inventories are high… and the news sounds negative. But when you understand the real story, you realize it's not an excuse to sell copper.

Charts say cover youtr short and/or consider going long. Frank why don't you go short? Put your money where your pulpit thumping scphincter is? How about it? All the way to a nickel big boy?  Dime?, twenty?, twenty-five?     Other Sellers like RBC should just put their offer up ...nice 110,000 @ .35 available.Don't like it, sell and move on lil dogggie. 

T:RDK Depth by Price @15:07:14
Bid   Ask
Orders Size Price   Price Size Orders
2 12,500 0.31   0.335 7,000 1
1 10,000 0.30   0.34 5,000 1
2 15,000 0.29   0.35 110,000 1
1 37,500 0.285   0.36 7,000 2
1 5,000 0.28   0.445 5,000 1
Close Prices Last 3 Months Price/volumes not adjusted for restructures
Date Ex Sym Open High Low Close Chg Total Vol #Tr Bid Ask   T-TSX   A-Alpha   X-Chi-X   P-Pure   O-Omega   M-TriAct   L-LiquidNet   E-TMX Select
2013-04-26 T RDK 0.335 0.335 0.31 0.31 0.01 23,800 9 0.31 0.335   15,800   4,000                       4,000
2013-04-25 T RDK 0.31 0.31 0.29 0.30 -0.01 126,700 20 0.29 0.33   116,700                           10,000
2013-04-24 T RDK 0.33 0.33 0.29 0.31 -0.02 250,700 26 0.31 0.34   242,200   4,500                       4,000
2013-04-23 T RDK 0.31 0.34 0.31 0.33 0.02 42,200 11 0.30 0.33   42,200                            
2013-04-22 T RDK 0.285 0.32 0.285 0.31 0.02 69,892 21 0.31 0.32   49,892   15,000                       5,000
2013-04-19 T RDK 0.28 0.30 0.28 0.29 0.01 220,200 20 0.29 0.315   205,200   10,000   1,000                   4,000
2013-04-18 T RDK 0.30 0.30 0.28 0.295 -0.02 86,500 6 0.29 0.30   85,000   1,500                        
2013-04-17 T RDK 0.31 0.31 0.30 0.30 0.01 59,000 4 0.29 0.32   59,000                            
2013-04-16 T RDK 0.31 0.31 0.29 0.29 -0.01 173,425 29 0.29 0.33   161,925   11,000   500                    
2013-04-15 T RDK 0.31 0.31 0.28 0.30 -0.045 177,192 38 0.30 0.34   152,692   24,500                        
2013-04-12 T RDK 0.345 0.35 0.33 0.345 0.005 54,395 15 0.33 0.345   54,395                            
2013-04-11 T RDK 0.335 0.34 0.30 0.34 0.005 73,500 16 0.32 0.34   60,500   11,000                       2,000
2013-04-10 T RDK 0.305 0.335 0.30 0.335 0.045 58,000 25 0.31 0.335   54,000   3,500   500                    
2013-04-09 T RDK 0.275 0.35 0.275 0.29 0.015 149,610 65 0.285 0.32   138,650   10,960                        
2013-04-08 T RDK 0.29 0.29 0.275 0.275 -0.02 150,900 22 0.275 0.295   128,400   12,500               5,000       5,000
2013-04-05 T RDK 0.295 0.30 0.28 0.295 -0.005 115,200 21 0.29 0.30   111,500   3,700                        
2013-04-04 T RDK 0.31 0.31 0.295 0.30 -0.005 92,000 16 0.295 0.31   70,000   22,000                        
2013-04-03 T RDK 0.31 0.315 0.29 0.305   287,000 60 0.295 0.315   268,000   6,000   3,000                   10,000
2013-04-02 T RDK 0.34 0.34 0.30 0.305 -0.035 353,800 60 0.30 0.32   310,300   27,000               4,500       12,000
2013-04-01 T RDK 0.35 0.35 0.34 0.34 -0.02 17,400 4 0.27 0.34   17,400                            
2013-03-28 T RDK 0.36 0.375 0.355 0.36 -0.015 89,487 17 0.36 0.37   76,987   12,500                        
2013-03-27 T RDK 0.38 0.38 0.36 0.375 -0.005 128,350 20 0.365 0.375   125,350   3,000                        
2013-03-26 T RDK 0.39 0.39 0.38 0.38 -0.03 32,500 15 0.38 0.39   26,500   6,000                        
2013-03-25 T RDK 0.385 0.41 0.385 0.41 0.03 14,000 6 0.38 0.44   10,000   4,000                        
2013-03-22 T RDK 0.405 0.41 0.38 0.38   23,200 6 0.38 0.41   23,200                            
2013-03-21 T RDK 0.395 0.405 0.38 0.38 -0.015 39,050 16 0.38 0.425   35,050   4,000                        
2013-03-20 T RDK 0.405 0.405 0.395 0.395 -0.005 30,000 10 0.395 0.42   23,000   7,000                        
2013-03-19 T RDK 0.42 0.44 0.40 0.40 -0.035 37,930 11 0.40 0.435   37,930                            
2013-03-18 T RDK 0.415 0.435 0.405 0.435 0.025 298,312 37 0.42 0.445   297,312   1,000                        
2013-03-15 T RDK 0.405 0.435 0.40 0.41 -0.005 103,500 17 0.41 0.435   100,000   2,500                       1,000
2013-03-14 T RDK 0.40 0.415 0.38 0.41 0.015 109,500 16 0.40 0.425   104,500   5,000                        
2013-03-13 T RDK 0.41 0.43 0.40 0.40 0.005 59,500 13 0.40 0.42   54,500   5,000                        
2013-03-12 T RDK 0.45 0.45 0.37 0.395 -0.05 266,727 51 0.39 0.41   264,727   2,000                        
2013-03-11 T RDK 0.48 0.48 0.445 0.445 -0.015 55,000 9 0.445 0.45   53,000   2,000                        
2013-03-08 T RDK 0.46 0.47 0.46 0.47 -0.015 13,500 5 0.46 0.48   12,500   1,000                        
2013-03-07 T RDK 0.475 0.475 0.47 0.475   40,100 8 0.46 0.48   35,600   4,500                        
2013-03-06 T RDK 0.455 0.48 0.455 0.475 0.025 100,200 26 0.465 0.48   95,700   2,000   500                   2,000
2013-03-05 T RDK 0.48 0.48 0.45 0.45 -0.02 73,650 17 0.45 0.475   71,650   2,000                        
2013-03-04 T RDK 0.51 0.51 0.47 0.47 -0.04 120,000 18 0.47 0.49   111,500   8,500                        
2013-03-01 T RDK 0.485 0.52 0.485 0.51 0.03 119,300 17 0.485 0.51   119,300                            
2013-02-28 T RDK 0.48 0.49 0.48 0.48 -0.005 79,100 8 0.47 0.485   79,100                            
2013-02-27 T RDK 0.485 0.485 0.485 0.485   117,550 8 0.465 0.50   116,550   1,000                        
2013-02-26 T RDK 0.50 0.50 0.485 0.485   158,300 11 0.465 0.50   158,300                            
2013-02-25 T RDK 0.49 0.51 0.465 0.485 -0.005 279,000 40 0.485 0.50   262,500   13,500                       3,000
2013-02-22 T RDK 0.52 0.52 0.49 0.49 -0.03 25,900 5 0.49 0.50   25,900                            
2013-02-21 T RDK 0.50 0.52 0.485 0.52 0.01 88,000 20 0.52 0.53   75,500   12,500                        
2013-02-20 T RDK 0.53 0.53 0.50 0.51   153,200 17 0.51 0.53   150,200   3,000                        
2013-02-19 T RDK 0.52 0.53 0.50 0.51 0.01 97,050 24 0.51 0.53   89,550   7,500                        
2013-02-15 T RDK 0.51 0.52 0.48 0.50 -0.02 86,245 23 0.49 0.52   84,745   1,500                        
2013-02-14 T RDK 0.54 0.55 0.52 0.52   51,200 14 0.51 0.52   51,200                            
2013-02-13 T RDK 0.52 0.53 0.52 0.52 0.01 65,300 15 0.52 0.53   65,300                            
2013-02-12 T RDK 0.51 0.53 0.50 0.51 -0.03 95,383 25 0.50 0.52   92,285   3,098                        
2013-02-11 T RDK 0.53 0.54 0.53 0.53   45,552 8 0.51 0.54   43,052   2,500                        
2013-02-08 T RDK 0.54 0.54 0.51 0.54   119,702 27 0.52 0.54   90,202   29,500                        
2013-02-07 T RDK 0.55 0.55 0.53 0.54 -0.02 230,106 30 0.53 0.56   218,606   11,500                        
2013-02-06 T RDK 0.55 0.56 0.54 0.56 0.04 37,100 22 0.54 0.56   32,100   5,000                        
2013-02-05 T RDK 0.56 0.56 0.51 0.52 -0.04 219,850 64 0.52 0.55   208,850   8,000   1,500   500   500   500        
2013-02-04 T RDK 0.56 0.58 0.56 0.56 -0.01 141,700 19 0.56 0.58   116,700   25,000                        
2013-02-01 T RDK 0.56 0.57 0.56 0.57 0.02 64,000 7 0.56 0.57   60,000   4,000                        
2013-01-31 T RDK 0.57 0.57 0.55 0.55 -0.03 57,599 9 0.56 0.57   57,599                            
2013-01-30 T RDK 0.56 0.58 0.56 0.58 0.04 84,500 13 0.55 0.58   81,500   3,000                        
2013-01-29 T RDK 0.56 0.57 0.54 0.54 0.01 68,100 14 0.56 0.57   68,100                            
2013-01-28 T RDK 0.54 0.54 0.53 0.53   26,700 10 0.53 0.56   26,700