Just three weeks into the New Year, the yellow metal may be up 3%, but aluminum is up 8%. Copper is up 17%.
All as excitement builds for Donald Trump’s multi-billion dollar infrastructure plans.
But what you may not be aware of is that the run in aluminum and copper is far from over.
We’re seeing a groundswell of interest like we haven’t seen for years.
Even hedge funds are buying.
In fact, in December 2016, hedge funds boosted their net long positions in more than a dozen commodities by 9.7%, including oil, aluminum, copper and cotton.
“After five straight years of losses, raw materials rebounded as supply gluts receded for metals and energy. There’s a growing chorus of voices that says the rally isn’t over,” noted Bloomberg.
“Citigroup Inc., the bank that was ahead of the game back in 2012 when analysts declared the end of the super cycle of rising demand and price, now predicts that most commodities will perform strongly in 2017 as global economic growth picks up.”
“Goldman Sachs Group Inc. in November recommended an overweight position for the asset class for the first time in more than four years.”
That’s a significant shift from December 2015 when most funds were net short.
Look at aluminum for example. At the start of 2017, prices have only inched higher, as the U.S. dollar retreats and as the supply-demand picture brightens on China and U.S. infrastructure initiatives. Even auto sales are fueling the boom.
Auto sales in US and China closed 2016 strongly.
Total vehicle sales in the U.S. hit an 11-year high in December, helped by a fourth-quarter surge in demand that blew past expectations. In China, car sales hit an all-time record in November, up 17.1% year-over-year, as well.
Should that continue aluminum prices are likely to move aggressively higher.
Even copper prices are firming on supply-demand conditions. London Metal Exchange (LME) prices currently stand near $5,500 after spending most of 2016 below $5,000 per metric ton.
Prices are benefiting even more after China noted its copper volume climbed import volume climbed nearly 30% last year, encouraged by heavier demand.
If you’ve been reading the Profit Alert Daily, you know we’ve been bullish on metals for quite some time. In fact, we most recently highlighted the aluminum and copper opportunities on December 20, 2016. And we can again assure you the run is far from over.
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