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Just because your favorite roller coaster is closed for the winter season doesn’t mean you have to give up thrills and spills—there’s always the copper market.

Copper hit a record high on the London Metal Exchange on January 4, and moved to a three-and-a-half year high in Shanghai. And then on January 5 copper dropped by 1.1%, the most since December 16.

In the short-term, I think copper, the other golden metal, could still move higher. There’s plenty of speculative juice for the remainder of January. I’d then look for a pull back of some sort around the beginning of February on a reversal of speculative sentiment. If you’re attracted to copper because of the likely long-term supply shortages and you haven’t built positions yet, I’d wait to see if early February brings the kind of dip that might let you slip a few shares of Freeport McMoRan Copper & Gold (FCX) or Thompson Creek Metals (TC) into your portfolio.

Here’s the speculative picture as best as I can lay it out now. Both the Shanghai and London markets were closed yesterday, January 3, so that when they opened today buyers who had been chomping at the bit to get in on the action after yesterday’s copper rally in New York rushed to place their orders. Copper for delivery in three months moved up 1.3% in London to catch up with the all-time high set the day before in New York.

Just as reports of better than expected manufacturing growth in the United States and Europe had driven yesterday’s action in New York, today speculation that inflation will moderate in China (well, there’s always a chance, right?) and that the Beijing government won’t need to crack down on growth drove the action in London and Shanghai.

Copper traders are also betting that Chinese companies will do their usual inventory build and lay in supplies of copper before the start of the week-long Chinese New Year holiday that starts on February 2. Chinese companies build inventories before the holiday so they’ll have plenty of raw materials when they resume production. (Of course, the January 5 decline was built on the same story: Stockpiles in London had climbed to the highest level since September 24 raising fears that Chinese companies were done building inventories

Traders also see short-term disruptions to supply from Chile, the world’s largest producer, due to a port accident at the Collahuasi mine and an accident at a Codelco refinery on December 29.

All these short-term factors are pushing up the price of copper now, but recently the rise has all the feeling of a roller coaster car nearing the peak before a thrilling descent. Inventories in Shanghai hit a six-month high last week and stockpiles in London Metal Exchange warehouses reached their highest level since September 24 on January 5. When Chinese companies stop building stockpiles—and stop placing new orders—and instead start drawing down inventories, and when those Chilean supply disruptions come to an end, copper is likely to take a drop. And, of course, any drop in price from an absolutely predictable decline in orders for the metal from companies that actually use copper will be magnified by traders looking to reverse positions—by selling where they had been buying–so they can make a profit on the downside as well as the upside.

I’d look for any drop to materialize around China’s New Year.

And I’d use that drop to add to or begin positions in copper stocks. As thrilling and scary as the short-term ride is likely to be, the long term trend sure looks headed uphill to me. Copper supply just doesn’t look like it will keep up with supply in 2011. Barclays Capital is projecting that copper demand will climb by 7.3% in 2011 after growing by 14% in 2010. Both Barclays Capital and Standard Bank Group are forecasting a shortfall in supply this year as demand rises and as the grade of copper in existing mines continues to decline and mining companies can’t open new mines fast enough to meet that rising demand. The International Copper Study Group forecasts a global shortfall of 435,000 metric tons in 2011.

That sounds like a recipe for higher prices even from current levels this year.

In recent weeks I’ve written about the copper supply/demand mismatch and recommended Thompson Creek Metals (TC) and Freeport McMoRan Copper & Gold (FCX) as the two lowest risk ways to invest in copper right now. (Both are members of my Jubak’s Picks portfolio.) You can also buy the shares of the companies, such as Joy Global (JOYG), that make the equipment that copper miners will buy to expand production.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. The fund did own shares of Thompson Creek Metals and Freeport McMoRan Copper & Gold as of the end of November. For a full list of the stocks in the fund as of the end of November see the fund’s portfolio at I’ll have the fund’s portfolio as of the end of December posted in a few days.