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Dennis Gartman: China’s Copper Stockpiles Could Drive Prices to $3.20

After the bell on Wednesday, the traders were closely looking at a new report which suggested China may be hoarding copper .

According to the Financial Times, China held 1.9 million metric tons of copper at the end of 2010, the first-ever disclosure of the country's inventory.

That’s significantly more than Street estimates which range from 1 million to 1.5 million metric tons.

And strategic investor Dennis Gartman thinks if the report is correct – and you have to be careful – but if the data is accurate, it will probably trigger a decline in the price of copper.

”China is very good at leaking news when they need it,” Gartman reminds, “but if the report is correct – this is the kind of news that could take copper down.”

Gartman explains that even though the data is from 2010, it will still hold weight in the market as a sign that China is stockpiling.

“An increase in inventories is a new concept into the market and it should bring lower prices for at least the next several days.” Considering the recent gains, “copper could test $3.20 per pound,” he says.

If that’s the case and copper declines, trader Joe Terranova sees opportunities. He does not think recession is on the table and as a result he's looking for pullbacks.

If these developments cause Freeport McMoRan, the world’s largest copper miner to pullback to $35, Terranova says, “I’m a buyer." But play it with a stop. "Below $33.55 I’d pull the rip cord and get out,” he says.




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Trader disclosure: On Oct 12, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian is long AAPL; Najarian is long C; Najarian is long MSFT; Najarian is long MS; Najarian is long YHOO bonds; Najarian is long WFC calls; Najarian is long ETFC; Najarian is long PEP; Najarian is long A; Najarian is long AKAM; Terranova is long VRTS; Terranova is long LQD; Terranova is long MUB; Terranova is long FCX; Terranova is long TBT; Terranova is long OXY; Terranova is long HOS; Terranova is long F; Terranova is long LULU; Terranova is long OIH; Terranova is long CAT; Terranova is long AXP; Terranova is long EMC; Terranova is long WFC; Terranova is long AAPL; Terranova is long IBM; Terranova is long Silver December $40 puts; Finerman owns AAPL; Finerman owns GOOG; Finerman owns JPM; Finerman owns MSFT; Kelly is long cooper; Kelly is short treasury bonds; Kelly is long IBM; Kelly is long KRE; Doolittle is long FAZ; Doolittle is long GLL; Doolittle is long SDS; Doolittle is long SSO; Doolittle is long TYP; Doolittle is long TZA; Doolittle is long ZSL; Gartman is short S&P 500 futures; Gartman is short euro; Gartman is long corn; Gartman is long wheat; Gartman is long British Pound

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