New Trade for August 24th 2020

Futures are pointing to a higher open this morning.  It appears markets are gearing up to add to last week’s gains.  Are we hanging by a thread up here or are the engines just getting primed?  Place your bets.  

We have been highlighting precious metals trades since the Gold spot price was at >$1500, way back in March.  Gold recently teased the $2000’s.  Silver spot price is also up significantly since our Silver call.  If you’ve traded our past precious metals plays, congratulations.  

Often overlooked Copper is seeing some bullish momentum as of late following a period of price consolidation.  Last week September futures moved above the key $3 per pound level for the first time in over two years.  

Copper inventories at the London Metal Exchange are at the lowest levels seen in exchange approved warehouses in 13 years.  In addition to lower inventories, Copper smelting also declined, with output seen at its lowest levels in over two years.  

At the same time we are seeing a decline in Copper output, demand is rising.  Demand in China, the World’s largest Copper consuming nation, continues to be robust.  Analysts are expecting demand to grow nearly 4% despite the economic slowdown due to the coronavirus outbreak.  

Here are the three top Copper companies in the sector:

  • Southern Copper (SCCO)
  • BHP Group (BHP)
  • Freeport-McMoRan (FCX)

Demand is rising, output is waning, all while the market is getting an extra boost from a weaker U.S. Dollar.  We could see Copper price continue to climb for the foreseeable future, but expect volatility.  


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