Peru is the world’s third-largest copper miner and currently produces 1.3 million tonnes, or 8% of the world total. Newmont Mining is pouring a massive amount of capital into the Peruvian mining sector. There are hurdles to overcome, primarily in addressing environmental concerns. However, if plans proceed as expected, output could double over the next two years. Even if the deficit number were accurate, an influx of such magnitude would handily erase any shortfall.
Chart 4 shows that funds are net long, but not overwhelmingly. A continuation of the rally in the stock market can easily carry copper prices above the $3.85-per-pound highs seen this past fall – and beyond.
Remain short. Maintain stops recommended on October 17 at $3.85, basis the nearest contract, close only.