Freeport-McMoRan Benefits From Staying Power of Copper
The ability of copper to maintain prices above $3/lb caught most Freeport-McMoRan Copper & Gold (NYSE: FCX ) investors off guard, including this one. Stubbornly high inventories at the London Metals Exchange, or LME, combined with subdued China demand for copper should've crushed the prices of the red metal used in all kinds of building materials from plumbing pipes to electrical wires. One key to investing is noticing when a thesis doesn't play out and attempting to understand and adjust to the reasons.
A prime reason for the stubbornly high price of copper could be investment demand in China, where people prefer to own hard assets versus cash in the distrusted banking system. Such investment moves wouldn't be listed in the inventories on the exchanges, but it could help support the price of copper.
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