RE:RE:Comes a Short Squeeze ? Regarding the Fed as a wild card - they want to raise interest rates for two reasons. The first is inflation. The idea is raise rates, create more unemployment, reduce purchasing and then reduce prices. This will not work as we have full employment and still have job openings. Since Covid, many have decided not to reurn to work. We have a shortage of people wanting to work and many openings. I was a Lowes yesterday, and they only had one cashier, and she stood at the self serve checkout and their was a huge line. They are short of cashiers. So, raise interest rates, try to create unemployment and there remains plenty of jobs.
Inflation we see is caused by supply chain shortages (Caused by fee money during Covid where both europe and the USA purchased 30% more than normal from China) and high oil prices caused by a combo of no drill permits in the USA and the war in Ukraine.
Supply chains from China will clear up witihin a year, and oil will stay hign as long as Joe Biden is president as (2) we need to keep exporting oil to keep global prices somewhat in check and sipport Europe and (2) drill permits in the USA continue to be slow walked. If we had a diffent policy, it wil take 18 months of drilling and more refinery capacity to drive oil prices down. Yet our refinery capacity is being sucked up by a larger transition to corn based ethanol fule, reducing planted acres and likely creating higher food prices.
So expect oil and oil driven inflation for a while. But only oil driven inflation.
Automobile demand for new cars is very high, and new cars have not been available, and while the supply chain will clear up and fix this and other proiblems, and inflation will drop from what it is today, the car demand for EV's and plug in hybrids will skyrocket.
In 12 months this will overwhelm the LME balance that today is about a 3,000 ton per month surplus. I exect this can easiy become an additioal 10,000 to 40,000 per month deficit from the green strategy of EV's, Hybrids, Plug in hybrids, charging stations, and most importably, Europes and China's need to not rely on improted oil. Today in China, 1 out of every 7 car produced is and EV. And out of 79 million cars manufactured globally, 21 million are in China. And Europe will be on fast policy for more EV's, nuclear and anything else to not rely on Ruasia. Lots of copper demand. Tank yiou Russian and Biden's lack of drilling.
The second reason for higher interest rates is the defense of the Dollar. Russia and China have long wanted to displace the dollar, and in one sense, Russia capturing Ukraine's grain and natural resouce produciton enhance Russia's exports of Grain and other commodities. Together, Russian and Ukraine represents over 25% of the worlds grain. (or 27%, I do not exactly recall). Anyway, we now see Russia demanding to be paid in Rubles and the Ruble at an all time hign. If by some chance, and it is low, the dollar could be replaced, funding USA's military by printing dollars, would not be possible. Hence, thus war in Ukraine has other reasons.
And so, keeping the dollar strong relative to the Ruble would likely be a priority for the Fed. When the war ends, this strong dollar policy may reverse.
So, we will see a strong dollar for some time, shortages of copper in a year or less, and at about the time the PEA for Oroco is published, I expect much higher copper prices within 3 to 6 months after the PEA, perfect for the sale of Oroco at a very high price to a major at exactly the right time.
Cheers