Since January 3rd, 2011, Freeport-McMoRan Copper & Gold Inc (FCX) has declined by almost 50% from its high of 61.25. Though the Chart of FCX might lead one to believe that FCX is getting ready to breakout of its multi-year descending triangle to the DOWNSIDE, I’d like to take the contrarian approach, the opposite side of this BEARISH argument, and make a BULLISH case for FCX. For all those who haven’t heard of FCX, FCX is a Gold Miner.
My BULLISH case for FCX is as follows:
1. The pattern is way too mature to even be considered as a legitimate Descending Triangle pattern. The BEARISH momentum on FCX has hit a road-block/a dead-end.
2. SPDR Gold ETF (GLD) which has a positive correlation of 0.8 to FCX, is getting ready to breakout of its multi-year pennant, to the UPSIDE.
I think the most likely path that FCX will take is similar to the one I’ve laid out for GLD in the above screenshot.
Plus rising inflation around the world will cause Gold prices to rise as well, due to increased demand for a safer currency.