Copper goes into backwardation

As gold went into backwardation, now also copper starts going into backwardation.We should see some upside in copper following this move into backwardation. But as opposed to gold, backwardation in copper isn't a good sign for the copper price. Meaning, if we see too much backwardation in copper (red curve making a bottom), you should expect a top in the copper pri...

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Copper Contango Report Shows Weakness to Come

We thought that the contango was going back to backwardation, but lately we see a reversal again.This is a not so positive development for commodities and stoc...

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Copper Contango Alert

Just a small reminder that the contango in copper is now dropping.That means the copper rally is about to start now.=> http://katchum.blogspot.be/2013/05/copper-contango-theory.h...

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Copper Contango Theory

This page is created to monitor the experimental "Copper Contango Theory".Historically, when the copper contango is high (red chart tops out), then we have a bottom in the copper price (blue chart bottoms out).We see the red chart topping out, so we are in the progress of getting higher copper prices.Additionally, when the commercials go long (purple chart goes up), copper bottoms out in the short te...

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Copper Contango Theory: Copper Bottoming Out?

It looks like the contango is steepening again, so that means that the price will likely go down. But the red chart seems to be topping out while the copper price seems to bottom out...Chart 1: Copper Contango Vs. Copper PriceThe COT report though is very bullish, so copper could go up in the future.Chart 2: COT report CopperAlthough the technicals are bullish, the fundamentals are very bearish. First we have the Chinese GDP below estimates. We have...

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Update: Copper Contango Experiment

I see a potential bottom in copper forming.For one, the contango (red dots) have formed a top, which always coincides with a bottom in copper price (Chart 1).Second, the large commercials are highly long on the copper COT report, which always coincides with a bottom in copper price (Chart 2).Chart 1: Copper Contango Vs. Copper PriceChart 2: Copper COT reportChart 3 : Copper Pr...

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Copper Contango Update

I have the feeling that we are going to make a bottom in copper soon, the contango will at one point begin to reverse. We are at 1.4% contango to price ratio now, it will go up to about 2-5% before it will reverse. Even when we have a copper surplus and record copper stocks in China.Chart 1: Copper Contango Vs. Copper PriceThe CFTC data shows that copper will most likely go up because large commercials are long.Chart 2: CFTC Cop...

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Copper Contango Experiment

One of the data that can't be wiped out from my computer is the Copper Contango Experiment.We see that the contango is widening each day, while copper price is declining. That is a normal thing.Once the contango reverses, we will see a spike in copper. I don't know when it will reverse though.Historically we need to go as high as 2-10% contango to mark a bottom in copper price as I pointed out here. Today we are at 0.04/3.5 = 1.1%. So there is still...

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Update: Copper Contango Experiment

The latest results indicate that the copper bull market is far from over. Contango keeps steepening (Chart 1) and the large commercials have covered their shorts in copper (Chart 2).Copper will go higher. (as will the stock market probably)I hope the record amount in copper stock won't put a damper on my contango theory.Chart 1: Copper ContangoChart 2: CFTC Cop...

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Update: Copper Contango Experiment

Since 2013, the copper contango Vs. copper price correlation hasn't worked at all.Both curves, blue and red are going up and down in tango, which is not normal. I wonder when the correlation will set in again, like it always had throughout history.Chart 1: Copper Conta...

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Correlation: Large Commercial Shorts in Copper Vs. Copper Price

Just for Discerning Admirer I looked at the CFTC report for Dr. Copper.The same correlations as in silver and gold can be found here. When large commercials go short, we hit a top in the copper price. When large commercials cover their shorts and go long, the copper price bottoms out.In the most recent February 2013 smackdown of copper we see that a lot of shorts have covered their short positions in copper. The red bars were very negative (a lot...

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Update: Copper Contango Experiment

There is no stopping of the increase in contango in copper. So don't expect a correction in copper price soon. Probably the stock market can still go up for a little bit, due to this expansion of the balance sheet of the Federal Reserve.Chart 1: Copper Conta...

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Copper Contango Update: Setting up for Take-Off

Dears, I'm getting increasingly excited with the prospects in the copper market. The contango has yet steepened again, while the copper price is still in an uptrend (Chart 1 and Chart 2). Once the copper contango goes back into backwardation (red dots go down), the copper price will surge.The copper price trend is in an ascending phase (Chart 2) and that tells me that stocks will rise (along with gold). Bonds will suffer greatly as the USD will plunge.You...

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Copper Contango Update

The contango on copper has been topping out as the LME stock level has also topped out. As copper goes back to backwardation, I see the copper price go up from here. It already spiked back to $3.68/lb which is the highest since October last year. And stocks are following nicely with this uptrend.Chart 1: Copper Contango Vs. Pr...

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Copper Contango Keeps Steepening

There doesn't seem to come an end to it. The copper contango keeps steepening to 2.5% for 1 year futures, while the copper price remains steady.If all goes as planned, we will see a huge copper and stock market rally in the future. Probably helped by good Chinese numbers. China's trade surplus surged 48% in 2012, its exports jumped 14% and its non-manufacturing PMI rises to a new high of 56.1. China has even so much money left over to double...

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Copper Contango Steepening

This week, the copper price kept rising with a higher contango, which is very unusual.Something needs to happen soon, either the copper price is going to drop precipitously, or the copper price is going to shoot upwards with a declining contango.I am still bullish on copper.Chart 1: Copper Contango Vs. Copper Pr...

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Update: Copper Contango Experiment

Copper just made an all time 3 month high at $3.72/lb since late September 2012. It went up 6% in just one day on positive PMI from the UK, Korea, China, Taiwan and India. All of the PMI's are above 50 which indicates expansion in GDP growth. Meanwhile, U.S. bonds fell off a cliff to 1.84% yield on the 10 year treasuries. It's not long now before we will see an increase in the velocity of money and come into an inflationary period.The rise in...

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2013: The Rise of Asia

We just had news yesterday that China's PMI went positive to 50.6, even by the standards of HSBC. This means that the GDP growth per year of China is going to increase. It is estimated that China will have a GDP growth above 8% in 2013.I think that's going to be a certainty. We can already see that base metal prices are rising as I pointed out the correlation between China PMI and base metal prices in this article.I believe the copper price is in...

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Copper Contango Experiment

This week, the copper contango remained high, but the copper price fell. So I still expect the copper price to go higher as we move to backwardation. The copper contango theory will not be wrong.As I write this post, I see the copper price go up from $3.53/lb to $3.59/lb.The next step to extend this copper contango theory is to identify the tops and the bottoms of the contango. What are the upper limits of contango and lower limits of the backwardation?...

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Update: Copper Contango Report

For the people interested in my copper contango Vs. copper price experiment:Yesterday we saw that the copper turned a little bit back into backwardation. This means that we will see the copper price go up in the future. As the copper contango turns back below 0 (backwardation), copper price should go up.Let's see if this will happen, hopefully the contango theory is right. I'm still betting on a copper break out.Chart 1: Copper contango Vs. Copper...

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