Copper, Copper, Copper
Copper went on one heck of a run from November through February, rising from US$3 per lb. to touch US$4.25 per lb. a month ago.
Runs like that can’t last forever and so this one stalled out, leaving copper trading around the US$4.10 level.
First things first: US$4.10 per lb. is a great copper price, strong enough to encourage lots of exploration and to entice investors to the space.
Of course, investors are most enticed when they see further upside. So what’s the outlook from here?
I think it divides into two parts: near-term uncertainty and medium-to-long-term optimism.
In the near term, there are a few factors at play. First, speculative investors piled in when copper went on its 40% run. Not surprisingly, many of those investors booked gains and moved on. Long fund positioning on the CME copper contract fell sharply in March. Because they are liquid and offer leverage options, funds often use CME contracts to establish copper exposure, so a downturn in long positions is clear evidence that such bets are falling off.
Importantly, short positions have not really risen. So it’s not that funds are flipping their bet from Copper Up to
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