No Need To Flip A Coin: Nickel Looks Poised For Another Good Year

Often lost in the shuffle in the conversation about base metals is nickel. Believe it or not, nickel is used for many more things than just pocket change and the smart money has realized that, pushing nickel futures higher and higher throughout 2010. Of course, that was good news for the iPath DJ-UBS Nickel TR Sub-Index ETN JJN. JJN and nickel futures have gotten off to fine starts in 2011, indicating the nickel party is worth a lot more than, well, a nickel. The ETN has surged 9.5% in the past week as it has become apparent that many of the 2011 nickel price forecasts that were thrown around last year calling for prices of $24,000-$25,000 per ton are looking too conservative. Three-month cash settled nickel is approaching $26,700 per ton on the London Metals Exchange. Nickel was actually the top-performing base metal in 2010 and Morgan Stanely thinks more of the same is on the way this year. “Nickel remains one of our most preferred exposures in the base metals complex, given our expectations for a tightly balanced market for the remainder of this year and into next,” the bank said in October. Morgan Stanley forecasts the average nickel price to be US$10.75/lb. in 2011, an 8.6 percent increase from the US$9.90/lb expected average price for 2010, according to Mining News. Too late to get involved with JJN? Probably not. Put a stop at $37 and target $53-$55 if you're willing to hold for the rest of the year. Now that would be some nice pocket change.