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Friday, September 14, 2012

Value of US Nickel Blows Thru Five Cents as Copper & Nickel Prices Soar

Of course, the disparate view of China hoarding and the US Government is China has trillions of $ paper/digital reserves to convert into 'stuff' of intrinsic value. We're more than flat broke. Our "copper" penny is no longer, it's zinc. 

A warring nation cannot wage wars without these essential minerals - and China and others know it. As we've said repeatedly, the only methods for governments to gain intrinsic wealth is by peaceable exchange for paper, Confiscation, or Conquest. In short, we're running out of gas. Even the biggest bully in the neighborhood eventually runs down. Governments don't win hand-to-mouth wars. Ask Hitler.


The conundra continue to mount up around the world as central planning efforts dislocate asset-values from reality wherever one looks. Nowhere is the juxtaposition of hope-and-fear more evident than in the industrial metals. We have discussed the reality of Iron Ore, and the unreality of China stimulus (funded or unfunded) bringing the excess inventory back from the edge ad nauseum but, as the WSJ notes, the stacks of copper slabs inside the warehouses of Shanghai last month grew by 20% since July.

In fact, so much copper has been sent into storage that it is being lined up outside some buildings as "there's much more metal than we'd expected," and some would see this huge inventory growth as a signal of "people's uneasiness about Chinese growth."

However, sure enough, copper prices are soaring - on the back of expectations that inventories are so high that the PBoC will step in with some stimulus and all will be well in the world again. While Deutsche Bank opines "any rally in copper prices based on expectations will likely not be sustainable," the alternate perspective, based on hope and dreams is that "just a couple of months of better demand - it will quickly change the perception of surplus to tightness." Meanwhile, the effervescence of central-bank-driven exuberance in prices has driven the 'value' of a good-old-US-Nickel up to 5.2 cents (its highest in four months).

Inventories soaring... and prices soaring... makes perfect sense...

Meanwhile, the central-planners' exuberance has 'helped' the value of base metals so that the 'melt-down' value of a Nickel is back above 5c...

It's all good - the mal-investment will continue until morale improves
Charts: WSJ and Bloomberg

Source>>  Nickel-And-Dimed-And-Coppered