Copper Shortage Disconnect?

A bunch of analysts (most recently Prudential) have been grabbing headlines by proclaiming that copper and other metals are set up for a bone-jarring fall this year -- and could perhaps lose as much as 25% in one day. And copper plummeted limit-down yesterday. And there was weeping and gnashing of teeth.

And the "sell-off" lasted all of one day. Has anyone considered that Prudential and the others might either A) be trying to talk copper down to buy it cheaper or B) be short copper?

Meanwhile, copper and copper stocks are soaring today, because miners walked off the job at the biggest copper mine in Mexico. Demand is still red-hot, and supply, strike or not, can't keep up.

And now -- NOW -- come the voices that say, hey, maybe metals AREN'T about to crash.

"We're about a third of a way through a long-term commodities bull market,'' said Mark Mathias, chief executive officer of Dawnay Day Quantum, a London-based fund manager that has $100 million invested in commodities. "Commodity bull markets tend to last 15 years plus. And we're not saying it's any different this time."

BHP Billiton, the world's largest miner, on May 4 said that in 2006 through 2008 there's likely to be a shortfall of copper concentrate, the raw material shipped by mines to smelters.

Read that again -- TWO FULL YEARS of shortages. Don't you think that's kind of a disconnect with falling prices? I sure do.

No wonder the zinc-copper stock we added to Red-Hot Canadian Small Caps last week is taking off. And the copper-gold stock we just bought in Red-Hot Asian Tigers (for the second time) jumped over 4% today.

We'll be adding more positions soon. This bull market in copper has a long way to go.

Check out my new gold and energy blog at MoneyAndMarkets.com