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Copper rallied to a two year high on Tuesday, propelled by optimism over the global economic recovery. The two main factors contributing to the red metal’s ascent was the news that Japan unexpectedly lowered interest rates, combined with weakness in the greenback.
By Leia Michele Toovey- Exclusive toCopper Investing News
Markets across the board were stunned, in a good way, with the announcement on Tuesday that The Bank of Japan will pump more funds into the struggling economy and keep interest rates at virtually zero. This caused the Euro to jump relative the U.S. dollar; making copper more affordable for holders of non-U.S. currency.
Meanwhile, the markets I will await key economic data from the U.S.. On Friday the world’s largest economy will announce their monthly jobs report. The data out of the US today reported that monthly non-manufacturing business activity index hit its lowest level since January. If the jobs report is disappointing, analysts believe the U.S. Federal Reserve will embark on more monetary easing, which would in turn erode the greenbacks value; and further contribute to copper’s ascent.
Helping the red metal track some impressive gains is the fact that supplies have been shrinking for months. Stockpiles in LME warehouses have fallen more than 30 percent since the middle of February. Tuesday’s data showed LME stocks down 350 tonnes to 374,100 tonnes.
In concert with this rally, investment powerhouse Goldman Sachs Group raised its copper price estimates because of swelling demand. The forecast implies a 35 percent gain from the metal’s current price. The bank had predicted on Sept. 17 that copper would trade at $8,050 a tonne in 12 months. Goldman today advised investors to buy the December 2011 contract as increasing demand leads to shortages of the metal. “Supply-demand deficits look set to grow on emerging- market strength and improving demand from developed economies, which we expect to significantly outpace supply growth, drawing down inventories and creating market shortages,” analysts including London-based Jeffrey Currie said in the report. “We don’t believe that the market is fully pricing these shortages and the potential for demand rationing that lies ahead in 2011.” Goldman now estimates that the metal will touch $11,000, per tonne.
Company News
Cariboo Rose Resources Ltd. (TSXV:CRB) and Fjordland Exploration Inc. (TSXV:FEX) ) are pleased to report that Gold Fields Limited’s exploration company, Gold Fields Horsefly Exploration Corporation has forwarded drilling results from the first seven holes of the 2010 campaign on the 13,827-hectare Woodjam South copper-gold-molybdenum property. Hole SE10-01 assayed 0.30% Cu, 0.07g/t Au and 0.006% Mo over 400.9 m. It was collared 200 m south-southwest of hole WJ08-84 which assayed 359.1 m grading 0.69% Cu, 0.27g/t Au and 0.006% Mo, including 200.8 m grading 1.01% Cu, 0.44g/t Au and 0.002% Mo. Two holes (SE10-03 and SE10-05) were lost prematurely due to drilling difficulties. Hole SE10-06 was weakly mineralized with a few narrow intersections grading over 0.13% copper. Hole SE10-07 was highlighted by a 234.6 m interval grading 0.24% Cu, including 83.6 m grading 0.38% Cu and 0.001% Mo. The hole was terminated in well-mineralized rock and the last 51.6 m averaged 0.45% Cu, 0.05g/t Au and 0.002% Mo. The focus of this year’s drilling on the Southeast Zone was to expand the limits of the mineralized zone, as suggested by a 2-km by 1-km induced polarization anomaly. Wide-spaced drilling of the seven holes reported below has now extended the area of mineralization to 1,500 m by 600 m.
RockBridge Resources Inc. (TSXV:RBE) is pleased to announce the completion of its fall drilling program on the Cross Hills, Newfoundland property. The Cross Hills property consists of 100 percent interest in 343 mineral claims covering 20,923 acres, prospective for Rare Earth Elements and metals and for Copper. Prospecting programs earlier this year encountered Copper of up to 1.95 percent, and Total Rare Earth Oxides of up to 1.11 percent from outcrop samples. All samples have been sent to Activation Laboratories in Ontario for analysis. RockBridge President, Gary Mathieson, stated “This fall’s drilling program is the first of its kind on this highly mineralized region. We look forward to the assay results from the core samples which are now in route to the laboratory for analysis.”
With help from Assistant Editor Vivien Diniz
