As we explained in great detail yesterday, the selling in commodities is far from over. The extent of China’s commodity-backed-financing is only now beginning to be understood and forced sales (along with the vicious circle of collapsing collateral values and increasingly tightening credit) are hard to stop for a government set of reform. Copper prices were heavy overnight in Asia but this morning has seen futures plunge on heavy volume below $289 – the lowest since July 2009– breaking key support levels. For the same reasoning, zinc and aluminum are under pressure, as is steel rebar and gold.
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Why is the price of copper important? It is a leading indicator of economic growth.
David DeGerolamo