Jim Letourneau's Blog

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Bearish on Base Metals? Think Twice

The long projected housing market crash in the United States and accompanying recession have led many commentators to become bearish on base metals.

I disagree.

I would suggest that the United States is not the center of the universe and while an important component of the global economy, it is not as important as people think. US-centric forecasts on base metals are ignoring the "big picture".

For example, recent research out of Goldman Sachs suggest that for every pound of copper demand destruction due to a slowdown in the US housing market there will be an offsetting increase of 6 pounds of increased demand from China.

When China has a recession it will be a different story for base metals.