Sell Copper, Nickel Before Index Rebalancing Ends

Mon Jan12 (NY) - by Anatoly Veltman - Chief Global Analyst - My good friend Bayram Dincer, a commodity analyst for Dresdner Bank AG, pointed out that LME combined stockpiles advanced a 27th consecutive week!! Expanding stockpiles suggest slumping demand, and investors should sell copper, nickel and other industrial metals that rallied this week because the rebalancing of commodity funds that caused it - will end! Copper, zinc and nickel gained this year on speculation that funds tracking gauges such as the Dow Jones-AIG Commodity Index and the SP's GSCI Index would buy more of the metals to reflect changes in the indexes' weightings. But at a point, you have to look at rising inventories: the rebalancing didn't change anything fundamental. From the economic data, there's still a lot of bad, bad news. Europe, Japan and the U.S. are in their first simultaneous recession since World War II, prompting the Fed to cut interest rates to as low as zero for the first time. The Reuters/Jefferies CRB Index of 19 raw materials fell 36% in 2008, the worst year in a half-century. The re-weighting of the DJ-AIG index runs Jan9-15, while the S&P GSCI rebalances Jan8-14 . . . (to read the remainder of this article, please log in below.)