Tuesday, August 16, 2016

Goldman and Barclays: long term bear market in copper coming.

Investopedia reports that Goldman Sachs and Barclay's are warning of a massive copper supply surplus that certainly must lead to an extended bear market in copper.

Of course, one would have to be stupid enough to believe that Goldman or Barclay's actually know what the true fundamentals are that move stocks.  In truth these guys always miss the major turns because they simply extrapolate current conditions forever in their analyses.  But the chart sees green shoots as it were as you can see from below.  I think that wave 1 up is complete and now we might have a small pullback as shown or it could hit the level of the prior 4th but then it is most likely going to laugh in the face of the Goldman and Barclays analysis by taking off into a 3rd wave up.

How can this possibly happen??  Do I not believe that they are smart?  Do I not believe that they know the copper industry?  Well, yes, they are smart.  And yes, they know the copper industry.  But share prices can move for MANY reasons which are not in locked step with the underlying industry.  Let's say the market begins to fear that deflation is ending and that inflation is picking up.  The market will buy commodities just to get out of the dollar regardless of some short term glut.  NO GLUT OF A USEFUL COMMODITY EVER LASTED FOREVER and no it won't be different this time.  So watch the chart, count the count and ignore the news and the fundamentals analysts who never saw this bust coming and so cannot be counted on to see the recovery in prices either.

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