Glassy eyes -- check; Sweaty palms -- check; Racing pulse -- check, check.
It's official. Red Metal Fever is back as copper prices skyrocket to their highest level in over a year. And, as far as the mainstream experts can see, the frenzy surrounding copper amounts to a picture of bullish health. Here, these recent news items speak up:
- "Copper Bull Marches On" (Gold Seek) -- and ---
- "The One Market You Can't Ignore Is ... Copper. The price of copper, more so than oil and gold, appears to be heading higher." (CNN Money)
This brings us to the last symptom of blind financial optimism, namely Amnesia -- as in, the total obliteration of all memories pertaining to past outbreaks of red metal fever and their gruesome aftermaths. The most recent occurrence: Summer of 2008.
At the time, copper prices hovered near all-time highs. Everyone from day traders to grave robbers considered the metal to be the ultimate "steal" -- literally. In the latter's case: Pilfered copper vases, urns, and markers from cemetery tombstones were being sold on the black market.
Then as now, the usual experts saw no end in sight to the red metals red-hot winning streak. On this, the following news items from May-July 2008 fill in the gaps:
- "Ten Reasons Why Copper Prices Won't Collapse" (Forbes)
- "It's investment demand rather than a shortage of copper that is driving prices. As its investment driven, it's difficult to see an end to it." (Associated Press)
- "Commodities Are In A Raging Bull Market... No matter the ultimate approach an investor takes, it's hared to imagine that there's anything wrong with being long... base metals." (Wall Street Journal)
Yet -- from the July 2008 peak, copper prices began a gut-wrenching, six-month long, 67% selloff.
So there was plenty "wrong with going long" copper back in July 2008. And, while the usual sources were too blind to see the bearish writing on the wall, the July 17, 2008 Metals Specialty Service took heed.
In that publication, editor Mike Drakulich reinforced his usual written weekly analysis of Copper and aluminum with the following live video update calling for an "important long-term TOP."
Mike's bearish copper analysis bears repeating:
"This is the first time, I want to stress the first time, in a few years that I can actually suggest to you that LME and Comex Copper, as well as aluminum, might have made long-term primary degree tops… You need to know it's possible and this obviously would have huge ramifications for the bigger picture and major declines could be in store… So again, a warning: We could have for the first time in several years, primary degree completions. This is a High-level Alert."
Jaw-dropping declines in copper and aluminum (to a three-and-a-half year low, and four-and-a-half year low, respectively) followed. To be exact, in the final four months of 2008, copper prices lost more value than in the four worst years of the Great Depression, between 1929 and 1933.
Flash ahead to today: the need for objectivity has never been clearer. And, as the current Metals Specialty Service "Monthly" copper analysis reveals:
"Over the next few months, under either bigger picture count, a large move is expected. So for now, we have what I consider to be a very solid forecasting roadmap."