Here's Why Investors Remain Committed to Copper and Silver
Two of the world’s key metals have been taking center stage in recent weeks.
Copper futures have surged, extending a rally driven by investors who’ve piled into the market in anticipation of deepening supply shortages. Silver prices have lagged gold prices as central banks prefer gold but it has recently caught a bid and joined the advance.
Let's check out some charts and indicators.
In this daily bar chart of continuous copper futures - linking a number of nearby contracts together - I can see a "parabolic-like" rally the past few months. Trading volume has ramped up in the past few months and the On-Balance-Volume (OBV) line has been strong. The Moving Average Convergence Divergence (MACD) oscillator is in a bullish alignment above the zero line.
In this weekly Japanese candlestick of copper futures, below, I can see that prices have surged to a new high. Futures trade above the rising 40-week moving average line. Trading volume has been increasing and the OBV line is close to a new high for the move up. The MACD oscillator has turned up for a new buy signal on this time frame.
In this monthly Japanese candlestick chart of copper futures, below, you get another bullish picture of the advance - up and away.
In this daily Point and Figure chart of copper futures, below, I used a five box reversal filter. Here the software suggests a price target in the $9.89/lb area. Ouch.
Now let's check out a few silver charts.
In this daily bar chart of the SLV, the silver ETF, below, I can see that prices have "been on fire" the past three months. Prices are firmly above the rising 50-day moving average line and above the rising 200-day line too. Trading volume is very strong now. The OBV line is strong and so is the MACD oscillator.
In this weekly Japanese candlestick chart of SLV, below, I went back several years to show the significance of the latest breakout at $28.
In this daily Point and Figure chart of the SLV, below, I used a five box reversal filter and the software is giving us a $53 price target. The Hunt brothers are smiling.
In this weekly Point and Figure chart of the SLV, below, I can see the same $53 price objective.
Bottom line strategy: This article or review is on the long side so let me give you my strategy. I have been recommending various precious metal ideas and copper ideas like SCCO and FCX for a while now. Please go back over my previous stories and decide on what you want to purchase or increase your exposure to. If you are nervous about a correction then start small and increase your position on the next sideways consolidation pattern.
The current bull market in materials could continue for several more years based on an eight year cycle so treat this more as an investment rather than a trade.
Decide on your risk level before you start your purchase(s).
I plan on covering the gold market again in a separate update. Stay tuned.
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