From the Trading Desk: Metals on the Rise

In my previous post, I walked through a few positions we currently own as well as entry points.   To recap, I want to share the September 2020 Lumber Chart since July 1st.

We entered this position on July 6th, well under $500. The shortage of lumber supply and the increased demand driven by new homes and remodeling have pushed prices well above $800. 

Another recap I thought worth touching upon is Tesla. The company hit a new all-time high of $2153.17 taking Elon Musk’s net worth to over $100 billion.

This week, I want to review some of the base metals. Nickel, Copper, Lead, and Aluminum are metals widely used in factories and in durable goods like automobiles. Their demand has risen along with the Chinese economic recovery and as U.S. orders for durable goods (Goods that last over three years) increased more than expected in July. 

Copper rose as inventory levels at the London Metal Exchange declined. This lower inventory level is mostly due to supply disruptions related to the coronavirus pandemic. Zinc is also on the rise, as coronavirus cases were confirmed in a Bolivian mine that suspended operations this week.  

The Bloomberg Base Metals Spot Price Commodity Index shows a clear picture of how these metals continue to rise above pre pandemic levels.  

I left Nickel for last because we entered a long position on July 8th. Nickel inventories in China fell to a two-year low driving prices to  levels last seen in November of 2019. 

Incorporating disparate markets in an investor portfolio can provide diversification benefits to stocks and bonds while simultaneously enhancing the overall return.