Commodity Trading: Copper Is Down…
I am not a big fan of copper and copper stocks but some of them are really worthy to own. But copper has had a rough rough ride. Copper prices reached their lowest level in 9 months thanks to resurgent dollar.The New York Mercantile Exchange (NYMEX) is the world’s largest commodity future exchange where commodities like Gold, silver and copper is traded. Copper was trading at 2.55$ to 2.66$ down 21%. This is really bad news for copper stock owners including me. Good news is that analyst expect the downslide to stop around 2.50$ where the market will stabilize.
The problem with copper companies right now is that they have big stock pile with slowdown in demand. This surplus has become a problem. The bigger the stock pile gets along with increasing warehouse cost will only make the investors more nervous and drive the prices down.
Rule of Thumb: A stronger dollar makes dollar-denominated assets like copper more expensive for overseas investors. The euro was down nearly 0.6 percent at $1.3084 in late afternoon trade in New York.
Conclusion: For now, stay away from commodity stocks. My personal favorite is TGB and it got slaughtered. TGB has EPS of 0.22 and decently priced P/E of 10.62. They posted solid earnings this qtr. Nonetheless it wasnt enough to catch all the big boys attention.