January 10, 2011
This is the time of year when markets make fools of us analysts. It is the time to guess at how copper prices will perform for the coming year. In recent years, forecasting copper prices have become increasingly complex because of the huge intrusion of the financial sector into copper and other commodity markets, which has resulted in there being established a direct correlation between equity markets, the US$ and copper prices.
This is a brief interim note to be followed by a detailed report later this month, but it contains our principal reasons why copper prices this year won‟t live up to the hopes of so many bulls.
The year started with a bang; the US$ was weak, equity markets were strong following encouraging data from the USA and copper prices rose to $9750, since pulling back. However, the financial sector remains fragile with substantial sovereign and private sector debt to be rolled over, many in the early months of this year.
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