Once the initial market euphoria on this vote in Athens runs its course, uncertainty will remain.
The last few days alone have brought running battles to the streets of the capital amid general strikes, and the final decision of euro zone officials remains unknown before they meet Wednesday to ratify the bailout package — or not, as the case may be.
Against this backdrop, the fundamental outlook for copper and copper ETFs (NYSEArca:JJC) remains relatively upbeat. [Related: Freeport-McMoRan Copper & Gold (NYSE:FCX)]
With the U.S. Federal Reserve pledging to keep interest rates low until at least 2012 and the European Central Bank last week returning to its own version of zero-rate policy, the International Monetary Fund still predicts that global growth this year will be 3.3%.
Economic activity in China (NYSEArca:FXI), which accounts for about 40% of all copper demand, will increase by 8.2% in 2012 and by 8.8% in 2013.
As an adjunct to this, wage growth in China remains high, with last year showing that real disposable income rose by around 10% and the government planning 13% minimum wage increases every year through 2015.
In a typical middle class house in China, as in the West, developers use around 400 pounds of copper in pipes, wire, and related goods, and as the middle class grows, there is little likelihood of home buying in China diminishing — or consumption of copper for construction falling off a cliff.
Against this demand profile, supply inventories tracked by the London Metal Exchange are already at a two-year low, after global mine output dropped by 200,000 metric tons in 2011.
Barclays Capital forecasts that incoming supply this year will fall 376,000 tons short of demand this year. Tellingly, perhaps, hedge funds are currently longer on copper than they have been since early August, according to the Commodity Futures Trading Commission.
In other words, we have recovered all the fundamental ground lost in the August market crunch, and are now back where we were in the relatively rosy early months of 2011.
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.