Buying copper as long term investment is one of the best ways of taking advantage of global economic growth. Forget about the situation in individual countries, global demand is strong and this commodity is hot and long term gains are expected of 100% or more! Triple digit gains per annum 100% annual gains are a strong possibility based upon past performance, in fact prices of copper have increased in price more than six-fold since late 2001. This price rise has been driven by strong demand from China and India, general world economic growth, tight supply and fund buying. The recent dip is NOT a trend change Copper is a barometer for global industrial demand, but it lost ground last week on concerns that rising inflation could trigger higher interest rates and dampen economic growth. The long term trend is still up! Copper is still up about 54% since the end of last year, supported by historically low inventory levels and a series of threats to supply and firm demand. This will continue as we have said forget individual countries global economic expansion is broad based and set to continue with China and India leading the way. The technical view. If we look at the technical picture, we can get a clear detached view of the trend. The weekly chart Here we can see the long term trend and its clearly up. Prices have dropped to the centre of the Bollinger band ( which is an area of fair value ) but stochastic momentum has yet to provide short term momentum. The daily chart As you can see from a short term perspective prices have hammered out support at last weeks double bottom and the week before provides another triple bottom layer of support. These are the areas to key off for long positions. Stochastic momentum has already turned up on the daily chart with bullish divergence and higher prices are expected. On a strong open on Monday (with the stochastic indicator still firm) enter the market with stops below the triple bottom. Keep in mind All bull markets have dips and this is exactly what this is nothing more, just a normal correction in a bull market. The dip now can provide you with an entry point to target 100% + profit potential annually! You can trade the market in two ways 1. Use options that give you unlimited profit potential and limited risk. Keep in mind that you need to buy at, near, or in the money options with lots of time value. This will help you ride out short term volatility 2. Use intra market spreads. This simply involves using two contracts in the same commodity. Buy the nearby and sell a deferred ( check the spread strength first though) spreads are great giving you the advantage of lower margins and staying power. Copper take long term view Forget the market noise focus on the long term and as you have see prices have grown hugely in recent years and we see no reason for this trend to reverse. This dip is a buying opportunity - so get ready for big long term gains |
