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Tyler Durden's picture


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


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Tue, 09/11/2012 - 15:06 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

A penny nickel for your thoughts?

<Damn that non-existent inflation. Damit to hell.>

OK Ben. You're good to go. Let'r rip.

[I can't wait to see how this movie ends. I bet it ends with a bang instead of a whimper.]

Tue, 09/11/2012 - 15:07 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Yes please, go ahead Ben, my metals portfolio (at the bottom of the lake, of course) will thank you.

Bloody sheep.

Tue, 09/11/2012 - 16:02 | Link to Comment ZerOhead
ZerOhead's picture

'melt-down' value of a Nickel is back above 5c...

Welcome to commodity backed currencies where a nickel is still worth a nickel. Unfortunately the new $1 gold coin is going to be this size > .

Tue, 09/11/2012 - 16:06 | Link to Comment ArrestBobRubin
ArrestBobRubin's picture


Tue, 09/11/2012 - 20:27 | Link to Comment Redhotfill
Redhotfill's picture

Jerry tell her about Shrinkage!

Tue, 09/11/2012 - 16:11 | Link to Comment sunaJ
sunaJ's picture

Let's see, what will we be forging in our backyards in 2014?  Perhaps FMJs out of PBRs?


Tue, 09/11/2012 - 16:33 | Link to Comment Colonel Klink
Colonel Klink's picture

Got it wrong CD, the value of the dollar is down 96%.  It's now a QUARTER for your thoughts.

Tue, 09/11/2012 - 15:05 | Link to Comment Tippoo Sultan
Tippoo Sultan's picture

...The current melt value of a pre-1982 Lincoln Cent stands at $0.024, with Cu trading at $3.64/lb.

Tue, 09/11/2012 - 15:11 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I <heart> my $6 silver quarters.

<The 10% copper just makes it that much nicer.>

Tue, 09/11/2012 - 15:26 | Link to Comment Ahmeexnal
Ahmeexnal's picture

That's a 24 fold gain in melt value alone.
Buuuuuuuut....war nickels give you more bang for the buck: 38 fold melt value gain.

Tue, 09/11/2012 - 16:10 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

How much is that doggie in the window?

<Denominated in PMs of course.>

Tue, 09/11/2012 - 15:10 | Link to Comment Winston Churchill
Winston Churchill's picture

Don't bet on that price for copper.

I think it will go sub $2 per pound next year.

Still worth storinhg for long term though.

Tue, 09/11/2012 - 15:19 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Especially when you can get 2 cents worth, for only a penny.

Tue, 09/11/2012 - 16:44 | Link to Comment hoos bin pharteen
hoos bin pharteen's picture

Especially denominated in 180 grain units...

Tue, 09/11/2012 - 15:09 | Link to Comment ArrestBobRubin
ArrestBobRubin's picture

"Not sustainable" says Deutschebank?

Yeesh. Talk about the pot calling the kettle black! The noive...

Tue, 09/11/2012 - 15:10 | Link to Comment PivotalTrades
PivotalTrades's picture

I think all of us with the ability to reason realize that the only way out of this world wide debt problem is the destruction of fiat currencies. So why the surprise that real things with real utility and value get more expensive versus those fiat currencies, equities included to the extent that they represent ownership of factories and intellectual property rights that will be used to produce products that will be re-priced to capture a great part of the comming inflation.

Tue, 09/11/2012 - 15:10 | Link to Comment distopiandreamboy
distopiandreamboy's picture

Copper is useful for making bullets I suppose

Tue, 09/11/2012 - 15:16 | Link to Comment BandGap
BandGap's picture

I was thinking the same thing......

China has 25 million more men than women. Have to find a use for these guys, and they do get anxious as they have no hope for finding a woman and raising a family.  So much angst, so little time.

Tue, 09/11/2012 - 15:24 | Link to Comment Fecklesslackey
Fecklesslackey's picture

I was teaching in China in 2000 and 2001 ... To see the pampered little boys made me ill ... There is a whole generation of 'Little Boys' that will reap the whirlwind and probably take the whole world with them

Tue, 09/11/2012 - 16:08 | Link to Comment ArrestBobRubin
ArrestBobRubin's picture

Bill Gates has a vaccination for that.

Tue, 09/11/2012 - 15:12 | Link to Comment slackrabbit
slackrabbit's picture

Shorted copper way back, my brother asked why? I said you can always count on idiots, its pays off every time

Tue, 09/11/2012 - 15:14 | Link to Comment PivotalTrades
PivotalTrades's picture

Better to have all that copper stacked on the ground then $ bill stacked in some vault. Or thirty year treasuries yielding less than 3%

Tue, 09/11/2012 - 15:16 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Gresham's Law bytchez!

Tue, 09/11/2012 - 15:17 | Link to Comment pods
pods's picture

So much funny credit money sloshing around sending shockwaves throughout the entire world as everyone and anyone chases return.

Now copper in over supply leads to the hope that another CB will inject even more funny money to use up that misallocation.

Yeah, this is going to end up well.



Tue, 09/11/2012 - 15:19 | Link to Comment q99x2
q99x2's picture

Well if there is a nuclear exchange between east and west. Both can come up out of their tunnels afterwards. China can live in the uninhabited cities and the US globalists can live in Detroit.

Tue, 09/11/2012 - 15:27 | Link to Comment crusty curmudgeon
crusty curmudgeon's picture

I think I'll save my nickels.  Great thing about buying nickels (at the current composition of 75%Cu/25%Ni): there are no transaction costs!  What other investment can you say that about?  Simply buy a roll and, if you decide it wasn't that great of an investment, just sell it back to the bank at face value.  This is a great investment opportunity for kids (if someone has enough money to buy LOTS of nickels, I'd have to think they're better off buying Ag or Au).

But as we'll soon have nickels made of some less valuable material(s), I don't think one can go wrong buying a roll or so, here or there.

"A society will remain as free or as enslaved as the conscious dispositions of individuals determine it shall be. Just as the roots of oppression are found in passivity, the foundations of our liberty reside in highly energized and focused minds that insist upon their independence. There are no shortcuts, no structures or doctrines that can be erected, no hallowed documents to be revered, to save us the effort of continually challenging those who would presume to exercise authority over our lives." - Butler Shaffer


Tue, 09/11/2012 - 15:33 | Link to Comment Winston Churchill
Winston Churchill's picture

Damn good shrapnel too.

Tue, 09/11/2012 - 15:20 | Link to Comment Silversem
Silversem's picture

i love trading the metals. i usualy use CFD's for that. It's the perfect instrument!

Tue, 09/11/2012 - 15:31 | Link to Comment Joe Davola
Joe Davola's picture

Hmmm, so that's where all the copper being stolen from construction sites / substation transformers is ending up.

Tue, 09/11/2012 - 15:44 | Link to Comment ziggy59
ziggy59's picture

I wonder if this will be the last year for the same composition of the is getting louder Treasury is looking for ideas for replacing composition...i agree adding to stack with addition of nickels cant hurt

Tue, 09/11/2012 - 16:22 | Link to Comment stant
stant's picture

coming soon, junk copper , nickle coins

Tue, 09/11/2012 - 17:09 | Link to Comment Colonel Klink
Colonel Klink's picture

Breaking news!  Melt value of politicians, federal reserve, and bankers worth more than same.

Tue, 09/11/2012 - 19:47 | Link to Comment imbrbing
imbrbing's picture

I wouldnt have thought they would have been even the value of the matchstick used to start the fire. But oh well, gotta

take a loss sometimes.

Tue, 09/11/2012 - 18:13 | Link to Comment Bennie Noakes
Bennie Noakes's picture

Nickels: change you can believe in. (Until they start making them out of zinc.)

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