Copper, along with related exchange traded funds, are on a multi-year decline and the ongoing bear market may get worse before it gets better.
Since the February 2011 high, the iPath Dow Jones-UBS Copper Subindex Total Return ETN (NYSEArca: JJC), an exchange traded note, has declined 54.3%.
Goldman Sachs argues that the base metal is headed for a seven-year-long bear market cycle, reports Aza Wee Sile for CNBC.
“It is, in our view, highly likely that the four-year trend decline in copper prices is set to continue through at least 2018,” Goldman Sachs said in a note.
Consequently, the bank has cut its three-, six- and 12-month copper forecasts to $5,200, $4,800 and $4,800 per ton, respectively from $5,500, $5,550 and $5,200. In contrast, the industrial metal rallied to a high of over $10,000 metric ton in 2011 on huge demand from China’s housing boom.