Hedge Funds Continue to Buy Copper
Copper investors are the most optimistic in 11 months, as traders speculate that the US Federal Reserve with announce a new round of quantitative easing (QE3).
Hedge funds are buying copper – the largest buys since May 2012 as London Metal Exchange warehouse stockpiles drop to their lowest level in 4 years. Currently, global demand vastly outpaces global supply, and the trend is looking to continue for many months as now copper projects are slow to develop.
Goldman Sachs believes that commodities may rise another 10% still. This comes on the heels of QE3 and the European Central Bank re-affirming record low EU interest rates. The ECB is also considering a large bond purchasing program similar to the US QE3. This will put a lot more money into the financial systems stimulating growth. However quantitative easing can also cause inflation – which causes gold and silver to rise as people hedge their risk in the metals.
Goldman Sachs is currently recommending that their customers buy and hold copper, expecting a 27% gain in the next 12 months.
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