Mercator Minerals Ltd MLKKF

RE: See you at 50 cents...

[ThaiDiamond]

"CU runup is over for a while. Will crash below $1.00..."


China has been a key contributor to the increase in copper demand and has stated that the country will continue to buy
copper as part of its stockpiling program.

China's reserve-building plan targets purchases of 1million tonnes of aluminium, 400,000 tonnes of copper and400,000 tonnes of lead and zinc together over three years,according to a report Friday on a Web site controlled by theChina Nonferrous Metals Industry Association.

That's a significant amount of copper.

Moreover, first quarter new Chinese bank loans more than tripled to a record 4.58 trillion Yuan. Their banks just lent 94% of what they did in all 2008!

This followed the removal of lending restrictions by the Chinese government which urged banks -- which are essentially a governmental conduit to fiscal policy -- to support its 4 trillion Yuan stimulus plan.

All the infrastructure spend should keep a fire under Chinese demand. Also March was an all time record for Chinese car sales. That too supports base metals.

All this is not to say that China will try to time its sales to some degree. If the price starts moving too high, it will back off until in drops back down. I would be surprised though at anything below a $1.50 and see a range more around $1.75 to about $2.25.  Until the rest of the world recovers.  Watch India as well. Growth there is still around 5% and their infrastructure need is great. And the Tata's new Nano car -- priced in at $2,000 dollars -- should have strong sales.

There is a reason China has not stopped accumulating this metal. They believe it is trading at a significant discount and their economy is continuing to expand significantly. As importantly, it is an important diversification out of the US dollar. Many thought countries like China would move significantly into gold.

So far, the 'precious' metal has been copper.