Reports that China will slow down copper imports appear to be wildly exaggerated based on the latest data from China General Administration of Customs

In June, the country's imports of unwrought copper and semi-finished copper products were 475,999 tonnes. an all-time record. It is the fifth straight month that imports of unwrought and semi-finished copper products have increased.

COMEX futures contracts however have been let for 429 Moz as of July 6 (vs 53 Moz of "eligible" silver in the vaults. If you add the future spreads, then COMEX has 522 Moz of contracts out vs 53 Moz of silver to cover those contracts.

Ever since the sentimentally unsustainable negative events of Q4, 2008, when gold simply exploded higher in ratio to over-played assets far and wide in a panicked rush for safety, the ancient monetary metal has been consolidating its relative gains. As noted at the time in NFTRH, this excessive reaction had to be worked off. Now, unfortunately for the unprepared and hopeful, it has been worked off. Forewarned is forearmed.

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In Part 1, I laid out some common sense explanations why gold is best utilized for short-term trading. Furthermore, I emphasized that gold rarely provides a good hedge against inflation. When it does, it’s most often a short-term phenomenon. In Part 2 of this series I’ll demonstrate this.

Let’s begin by looking at a gold price chart from 1975 to 2009. Note that gold prices in this chart have NOT been adjusted for inflation.

…the U.S. might continue its trend towards inflation merely due to continued high oil prices and weakness of the dollar. And only after some disaster such as a Fannie Mae blowup might deflation appear. Regardless of the magnitude of any economic correction, the next decade or two more will most certainly be characterized by extreme inflation. A severe catastrophe might usher in a deflationary period as an after-effect, but only after inflation has caused significant damage.Thus, the possibility of deflation will most likely be determined by the sequence of events, as well as the extent of the economic correction, while high inflation is a virtual certainty.

Source: America’s Financial Apocalypse: How to Profit from the Next Great Depression (2006)

By Brad Zigler

Real-time Monetary Inflation (per annum): 8.3%

Boy, gold took it on the chin Wednesday. The August COMEX contract closed at $909.30, a critical retracement of the March-November 2008 decline, and below key support for the intermediate-trend spring 2009 rally.

Companies like Aurizon Mines Ltd. (AZK) have provided some of the best investment performance in the first half of 2009 where gains are tough to come by in any sector, and uncertainty persists. Aurizon’s disciplined approach to resource development at its Quebec-based Casa Berardi project has resulted in steady production above 150,000 ounces annually, and exploration success that will add years to the mine’s life once incorporated into 43-101 compliant reserve estimates.

Aurizon itself has seen its share price improve steadily since the turmoil in late 2008 brought its share price down as low as $1.50. Since touching a high of $6.28 in April, the price continues to hold in a range above $4.00.

Few investment advisors, or investors for that matter, think of gold as a stand-alone asset class. That’s a shame, because it means most investors missed out on spectacular gains during the last decade. As you can see from the graph below, the last 10 years have been one of the worst on record for stocks, with the S&P 500 having lost 37 percent before dividends. Gold, on the other hand, has returned a pulse-quickening 325 percent over that same time frame.

Hard economic data has yet to show signs of imminent inflation, but the buoyancy of gold prices demonstrates an ongoing fear for the future. Investors seeking a safe haven from possible inflation, while still desiring to participate in any upward movement of the stock market, should consider Market Vectors Gold Miners (GDX), which tracks the stocks of gold companies. GDX hovered in the top five of our Sector Momentum Tracker ETF rankings from May 19 to June 30, indicating the appeal that gold continues to hold for investors worldwide.

Rather than owning actual physical gold, like SPDR Gold Shares (GLD) or iShares Comex Trust (IAU) does, GDX invests in the stocks of gold miners. While this strategy may not be as “pure” a gold investment, GDX offers investors leverage when it comes to gold prices. Because there are two forces at work, the cost of bullion and the costs of the companies that are mining it, GDX often rallies harder as gold prices rally, but it can sink faster if the costs of the companies outpace the profits from bullion. In 2009, leverage offered by GDX has helped this fund beat IAU and GLD. Year to date, GDX has risen 13.08%, while GLD and IAU have jumped 5.47% and 5.48%, respectively.

Below we highlight our trading range charts of ten major commodities. The green shading represents between two standard deviations above and below the commodity's 50-day moving average, and a move above or below this green shading is considered overbought or oversold.

On the energy front, oil and natural gas have declined quite a bit over the last week. Oil remains in the center of its trading range, however, while most other commodities are now in oversold territory. Gold, silver and platinum have all pulled back sharply since early June, while corn, wheat, and coffee have fallen off a cliff. The one commodity that has bucked the overall downtrend is orange juice. It was in oversold territory just a couple of weeks ago, but it has rallied nicely in recent days.

Speculators lost their heads in the first half of the year when copper and nickel imports into China went through the roof. The fact that copper imports to China were nearly double even peak imports at any time over the global economic boom this past decade suggested that China was opportunistically stockpiling copper.

Demand from China appears to be softening now that stocks have been rebuilt to mid-2008 levels says Macquarie Research. Supporting this view is the fall in China copper prices relative to overseas prices, the premium having fallen substantially in recent weeks.

Anglo American PLC (AAUK) directors might not think so, but a merger with mining rival Xstrata PLC (XSRAF.PK) is not a bad idea, says Tony Robson, BMO Capital Markets analyst.

On June 17, Xstrata proposed a $39-billion merger of equals with Anglo American that would create a mining giant to better rival BHP Billiton (BHP), the world's largest diversified miner. However, five days later Anglo-American's board of directors rejected the offer, saying it was "totally unacceptable,” and would dilute Anglo’s “unique exposure” to platinum, iron ore and diamond markets.

Ivanhoe Mines Ltd. (IVN) has verbally confirmed that an investment agreement between the company and the government of Mongolia has received approval from the heads of the country’s two major political parties in Mongolia, according to Desjardins Securities analyst John Redstone.

The price of gold and silver is set to hit new highs in 2010 due to unprecedented financial conditions around the world, Canaccord Adams says.

Wendell Zerb, analyst with Canaccord, is maintaining a possible peak gold price of $1,100 per ounce set in February, but has shifted the timing to 2010 from 2009 to coincide with expected broad currency devaluation and higher global inflation.

In the midst of the longest and deepest, post World War II recession, America’s financial position with the rest of the world has deteriorated sharply. Three decades of massive trade deficits have turned the United States from the world’s top lender to the world’s largest debtor, and dependent upon the whims of the so called emerging nations, laden with huge foreign currency reserves, to finance the bailout of Wall Street Oligarchs, and President Barack Obama’s social programs.

Foreigners own roughly half of the US government’s publicly traded debt, or $3.47 trillion, representing nearly 25% of the size of the US economy, the highest level in history. If foreign lenders were to significantly reduce their purchases of US Treasury notes, without even dumping their current holdings, US long term interest rates could zoom higher, and the US dollar could crumble.