# Will Commodities Recover?



## MalteseBull (16 May 2006)

What's everyone tips regarding Commodities prices..

Apparently there was a massive sell off thats why the prices of metals went down..

Is this downfall expected to continue or does anyone think its a setback for another bull run?


----------



## rederob (16 May 2006)

MalteseBull said:
			
		

> What's everyone tips regarding Commodities prices..
> Apparently there was a massive sell off thats why the prices of metals went down..
> Is this downfall expected to continue or does anyone think its a setback for another bull run?



Perspective is everything.
Copper rose 40% peak to trough in less than a month!!!!
And we can't come to grips with a correction?
Copper can drop another dollar per pound and it will still be higher than it was at the begining of April.
Global market fundamentals remain solid.
A bit of profit taking in commodities is the best thing that can happen when the market overheats - copper's RSI was around 85 when speculative money was taken off the table.
Copper will quickly reclaim $8000 and if the market's fundamentals remain in place, put $10,000 as an upside target.


----------



## Sean K (16 May 2006)

Commodities will keep climbing until Chindia stops developing exponentially. 

Sometime in 2020.


----------



## wavepicker (16 May 2006)

kennas said:
			
		

> Commodities will keep climbing until Chindia stops developing exponentially.
> 
> Sometime in 2020.




personally I think as I have said in previous threads commdoties will go into decline for the next 2-3 years. However, I still beleive commodities are in a secular bull market and thereafter will shoot for new highs. 

As for our market here I beleive a pullback to 3700-3800 is in order Thereafter the market will have another rally but not to new highs, rather a sideways consolidation lasting a few years. From that point, along with commodities it will shoot up to new highs in the order of 6000-7000 points before the real bear market begins.

Just my opinion


----------



## tech/a (16 May 2006)

There will be opportunities soon enough.


----------



## rederob (16 May 2006)

tech/a said:
			
		

> There will be opportunities soon enough.



Only got KZL today, so far.
Want BPT and APA but neither are close to my valuations yet.
BHP won't fall hard either.
Probably the pick of the midcap producers at moment is SMY, having just raised $20m at $1.25 and trading at an 8 cent discount.


----------



## MalteseBull (16 May 2006)

I am tipping a recovery in commodity prices tommorow..

As seen by most metals, it flucuates in cycles... major set back then a major rebound

- my 2 cents


----------



## rederob (16 May 2006)

MalteseBull said:
			
		

> I am tipping a recovery in commodity prices tommorow..
> As seen by most metals, it flucuates in cycles... major set back then a major rebound
> - my 2 cents




Silver and Gold up almost 2% as Asian markets pick out the eyes.
Maybe it's all over for the metals and another few days for oil.
Am watching that space - make it a gap-filling exercise!
Even the allords has bounced back - not even 20 points down: Very disappointing day for buyers after all the dribble on mainstream media.


----------



## MalteseBull (16 May 2006)

keeping a close eye on gold at the moment

www.thebulliondesk.com


i think tommorow will be more positive, going back to $700 imo


----------



## eericson000 (16 May 2006)

I surely hope it will be postive hahaha, sitting on red still


----------



## LPA (16 May 2006)

I'm going with your feeling too Maltese - gold seems to have hit a stable point at 680 for the moment.  By the end of the week I see it hitting 700 again....plus the ASX is going to rebound big time this afternoon/tomorrow morning imho.


----------



## tech/a (16 May 2006)

Just some basic technicals on the "Big Three".

I expect them to pull up or stall in the Red Boxed areas.


----------



## wayneL (16 May 2006)

There may be more downside, but:

"rumours of commodities demise have been greatly exagerated"

Markets move in waves folks.


----------



## GreatPig (16 May 2006)

wayneL said:
			
		

> Markets move in waves folks.



And these last couple of days have been the breakers...

GP


----------



## rederob (16 May 2006)

wayneL said:
			
		

> Markets move in waves folks.



Wayne
The metals' charts seem to resemble "shark teeth" more than waves: Used to get a top with a bit of froth, a few days freefall, then a bit of a rounded bottom, some consolidation, then a steady move back up.
Now the market's on drugs.
*I wanna "high" - hit me!
More, more.
Yeah baby, give me more.
Whaaaaaat!
No more.
I'm outa here*]​Thud.
Next please.......


----------



## MalteseBull (16 May 2006)

Gold up at the moment, looking better


----------



## nizar (16 May 2006)

MalteseBull said:
			
		

> What's everyone tips regarding Commodities prices..
> 
> Apparently there was a massive sell off thats why the prices of metals went down..
> 
> Is this downfall expected to continue or does anyone think its a setback for another bull run?




commodities demand is still high and supplies are still going down
will prices be higher at the end of the year?
YES
at the end of the week?
YOUR GUESS IS AS GOOD AS MINE
the shorter the view ur taking, the more the fundamentals dont matter

the "massive" fall in zinc, down 12% at one stage on monday US time, the biggest fall in 16 years, took us back to where we were 2 weeks ago, and the "worst fall in 2 years" in copper, took us back to last tuesday


----------



## nizar (16 May 2006)

MalteseBull said:
			
		

> Gold up at the moment, looking better




i wouldnt be in such a hurry for it to go up
more consolidation would be nice, i think it would be healthy for it to fall to around 600-620, and then the next leg will take us to the next resistance of 850 very fast

i tell u what happened in the commodities sell-off
some of the majors who had their longs open for many years and are sitting on significant gains, sold a little, and then the speculators who got on board recently thinking: "Yeh that chart of copper and zinc are looking pretty aight, i reckon it mite go a bit more" and went for a bit of a gamble, bought, as soon as it dipped a little, they all dumped, ignorant of the fundamentals, and hence we have the sell off. The metals closed near to their highs becoz the smart money are getting back on...


----------



## ctp6360 (17 May 2006)

I hate to disappoint you Nizar but gold is pushing even higher, up to 691.5 as I type this and looking pretty strong. I'm not really too fussed with what it does in the short term but its good to see that these last few days have definitely just been a correction and not a sign of things to come. Or at least that is what I keep telling myself.


----------



## wavepicker (17 May 2006)

ctp6360 said:
			
		

> I hate to disappoint you Nizar but gold is pushing even higher, up to 691.5 as I type this and looking pretty strong. I'm not really too fussed with what it does in the short term but its good to see that these last few days have definitely just been a correction and not a sign of things to come. Or at least that is what I keep telling myself.




From what I can see on the 1 hour hart, this fast move down looks like a textbook impulse( a clean 5 wave structure.) If this is the case the move back up will be temporary and it is heading lower soon

Intereting to see what happens but luck favouring the bears at this stage.


----------



## tech/a (17 May 2006)

Agree that this is likely to be a corrective pattern rather than a V top and V bottom.

Will likely base then move up to test highs then make a new low before either consolidating to make a 5 wave corrective pattern or move to a new wave pattern from a wave 3 correction.

Expect similar in the charts above.


----------



## Kipp (17 May 2006)

Will someone please tell me if the kitco prices are ok again?  Their website has been crap for the past week- at a very frustrating time when prices were sent to hell... is Zn currently 1.57?  And Ni 9.30?


----------



## MalteseBull (17 May 2006)

that was short lasted


----------



## bowser (18 May 2006)

interesting article from Jim Rogers:

http://news.moneycontrol.com/india/...itefalljimrogers/market/stocks/article/215150

Worth a read for bull or bears.... 30-40% correction then off to the races again???


----------



## rederob (1 August 2006)

tech/a said:
			
		

> Just some basic technicals on the "Big Three".
> 
> I expect them to pull up or stall in the Red Boxed areas.



Tech
Grateful if you can update your "big 3" charts.
It appears KZL is the present "winner" on the commodities rebound.
I expect further rises in commodities, strengthening early September.


----------



## phoenixrising (1 August 2006)

rederob said:
			
		

> Tech
> Grateful if you can update your "big 3" charts.
> It appears KZL is the present "winner" on the commodities rebound.
> I expect further rises in commodities, strengthening early September.




He's overseas atm, I think he said 6 weeks about 2 weeks ago. Hopefully he'll see this late Aug in time for your early Sept prognosis. I'm interested also.

Cheers


----------



## dubiousinfo (4 August 2006)

Copper shortage looms in mainland

China could soon face a shortage of refined copper and may have to sharply ramp up imports, mainly because production from domestic producers is falling in a hot economy.

Friday, August 04, 2006

China could soon face a shortage of refined copper and may have to sharply ramp up imports, mainly because production from domestic producers is falling in a hot economy.
Refined copper imports fell 44 percent in the first half of this year to 389,560 tonnes, which helped bring down the high-flying world copper price after it hit a record of US$8,800 (HK$68,640) in May.

But Chinese analysts say the mainland, which uses more than 10,000 tonnes of refined copper a day, cannot afford to stay away from the import market for much longer because output from local producers is falling.

If China does turn to imports again, copper could soar again from the US$7,800 price it has ranged in lately on world markets.

"The Chinese copper market may see a shortage in September," said Jing Chuan, senior analyst at Great Wall Futures, expecting Chinese smelters will reduce production because of insufficient concentrate, the raw material for copper.

Domestic copper consumers are being compelled to pay premium prices for copper, which could attract higher imports to the country.

China's eight top smelters may cut production as they are demanding suppliers pay fees of US$100 a tonne for treating and 10 US cents a pound for refining spot imported concentrate. Suppliers are only willing to pay about US$80 and 8 US cents. 

The smelters' need for spot imports would also rise if overseas miners pare back a price-sharing scheme on multi- year contracts as soon as this month. The price-sharing scheme allowed smelters to share in the benefits of a rising copper price.

"China produced more copper in the first half because the smelters held large inventory of concentrate. But they have used up most of the inventory," said Zhang Heng, analyst for Jinrui Futures, a unit of Jiangxi Copper, the mainland's largest producer.

Yang Jun, who heads a team representing the eight smelters, said last month smelters might cut production by 10 percent in the second half. Analysts say that could mean a cut in 100,000 tonnes of copper.

Also, analysts believe the State Reserves Bureau may end its latest copper sales soon.

"The bureau's sales should be about done," an analyst at investment and trading firm Wanxiang Resources said.

The body, responsible for managing China's copper stocks, sold 62,400 tonnes of stocks in May to June and is still selling another 46,600 tonnes in Shanghai, according to industry officials.

"There is another problem - when the bureau will buy back?" Jing Chuan at Great Wall Futures said, referring to the agency's need to replenish stocks.

Meanwhile to feed China's booming economy, more copper is needed, not less, by the fabricators. Copper substitutes have also done little to ease demand.

"The overall situation is stabilizing. Copper imports should rise," said Zhang Xuefeng, a trade manager at Luoyang Copper, which makes refined copper and copper rods.

The analyst at Wanxiang Resources said big fabricators were receiving more orders and that would push up their copper demand from September.

In June the major fabricators imported 32,800 tonnes of refined copper duty free for processing the metal into products such as rods and strips for exports, half of the country's imports in that month.

Smaller fabricators, who buy copper from merchants, took up about 9,000 tonnes of imported metal in June. 

REUTERS


----------



## wayneL (4 August 2006)

I was speaking to a friend who is a BigKnob of one of the major mining companies up here in Geraldton today. We were talking about interest rates/real estate etc. when out of the blue, unsolicited from me, he starts talking about the mining boom.

(I never say say anything bearish around mining folk)

Anyways he says and I quote "I give another 12 months max before it falls on its ****". The reasons are to do with China and I would be betraying a confidence if I repeated (and much of it was over my head anyway) as it seemed to be sensitive info.

But there you go.

Cheers


----------



## Magdoran (7 August 2006)

bowser said:
			
		

> interesting article from Jim Rogers:
> 
> http://news.moneycontrol.com/india/...itefalljimrogers/market/stocks/article/215150
> 
> Worth a read for bull or bears.... 30-40% correction then off to the races again???




Hello Bowser,


Thanks for posting the link.  I’m a fan of Jim Rodgers, especially from the time he and George Soros were a team in the early days of the Soros fund.  

“Hot Commodities” was a really interesting read (still have it on my shelf), and gives an interesting macro perspective on commodities and economic cycles and opportunities.

This interview shows that in the longer term Rodgers is still bullish across the board on commodities.  It is interesting reading his take on China and India, preferring the Chinese market to the Indian…


Regards


Magdoran


----------



## ducati916 (14 August 2006)

*et al* 

Whenever you discuss China, almost by definition you are discussing the US in addition. The bone of contention currently, and for quite some time is the CAD & *real* value of the Yuan.

Although far from accounting for the entire Government liabilities, the CAD is a good illustration of the fallacy of the numbers taken out of context;

The Balance of payments figures are invariably difficult to interpret correctly due to the nature of the accounting.

An hypothetical example;

Current Account;
Income Profits earned abroad............$1750

Financial Account;
Private Direct Investment...............[-$1,500]
of which,
Financed by borrowing...................[-$500]
Unremitted profits......................[-$1000]
Banks overseas borrowing................+$500

Change in Reserves.......................[-$750]

The current account would seemingly show a deficit of $750, the reality is however, a completely different result.

Such is the position with the US current account deficit, and unless you can see all the figures you'll never know the true position.

What is a *fact* is that when the Bush administration passed the tax breaks on repatriation of foregin profits expiring the end of 2005, the rally in the US$ was enormous, convincingly demonstrating the fallacy of the current account deficit based on limited information.

So while their are structural problems that must be addressed, Medicare, Medicaid, Social Security and Pensions, the CAD that is portrayed in the media is only part of the story.
The second and much longer story is the relationship of the US & China and their symbiotic relationship.

As to Gold and speculative money, consider the following stats from last week;
Equity Funds.......................[-$920M]
Cash....................................+$7.95B
Taxable Bonds..................+$900M
Municipal Bonds...............+$207M

China can only consume 42% of their own output [this is a very small consumption]
They thus rely on the rest of the OECD bloc to take the surplus production.
The US accounts for some 68% of the 58% surplus.
Walmart alone accounts for 30% of the US 68%

Now supposing China did not cycle the FX surplus back to the US via the purchase of Treasuries? Could, would the US continue to purchase Chinese manufacturing output?
Protectionism is very strongly on the rise through Congress & Senate working parties, you need only look at various mergers that were blocked recently.

Trade tarriffs, etc are again a fact of global trade, thus, should China NOT support the US consumer, the US consumer would possibly be denied the opportunity to purchase from China just in case they would still wish to, or could afford to.

China is still a managed economy.
It is managed locally with great inefficiencies and wasted capital.
In China, it has led to massive overinvestment in manufacturing assets in sectors already suffering from oversupply. Investment in fixed assets -- everything from steel mills to cement plants to oil refineries to highways -- grew by 30% in the first half of 2006. 

Although the reported profits of China's largest industrial enterprises climbed 28% in the first half of 2006 over the same period in 2005, companies in some sectors have seen profits squeezed, sometimes to the vanishing point. According to government numbers, 80% of the profits in the Chinese economy went to companies in the oil, power, coal and nonferrous metals sectors. The other 30 sectors of the economy shared just 20% of corporate profits.

Profits in the Steel sector dropped by 20% in the first half of the year. The problem is overcapacity. Too many steel companies have added too much capacity, driving down the price they can charge for their product.

Cheap money in plentiful supply has produced a real estate boom in China, too. Higher prices pull more money into real estate, of course. In the first six months of 2006, real estate investment climbed 24.2% over the same period in 2005. According to the National Bureau of Statistics, 1.41 billion square meters of housing were built from January through June 2006, up 21% from 2006. 

China needs GDP growth north of 7% a year just to stay even with the number of new job seekers thrown up by its massive population every year. 

A purely rational economic analysis would say that if Chinese textile makers can't compete after the yuan is appropriately revalued, then the least-efficient companies in the sector should go out of business and the jobs should flow to countries, perhaps Vietnam, where lower labor costs would allow textile makers to make a profit.

That would mean shipping jobs out of China, however, and advocating that is political death in a country that needs to create 20 million jobs a year to keep the population governable by the Communist regime.

Therefore, it would seemingly be economic suicide to dampen demand from the US via refusal to fund the deficit in trade. The second part of the equation being, how much of the infra-structure, & productive assets belong to US Corporations via their FDI investments?
Just because the profits are not being repatriated due to tax reasons, does not mean the profits are not accruing to Corporate America.

As far as China supporting the current historically high commodity prices, it doesn't look particularly promising based on the lack of profitability in Chinese industry, declining demand from the US as tightening credit starts to squeeze the consumer.

Anyway, food for thought
jog on
d998
___________


----------



## BlueDaze (15 August 2006)

*Base Metals*

Base Metals
by Doug Casey
August 11, 2006

Base metals are called that because they oxidize, corrode and react easily. The primary ones we're concerned with are: copper, nickel, lead, zinc, aluminum, and iron. Their inherent value lies in their industrial uses, not as money, like the precious metals - though silver is an interesting hybrid, being both an industrial metal and good for making small change as money. Compared with precious metals, base metals are plentiful in nature and therefore much cheaper, of course. The exploration question is not generally one of finding them, but one of finding enough of them concentrated in a large enough deposit to make them profitable to extract for a substantial length of time. Eventually, their fortunes are tied to the state of the world's economy - the fundamentals of supply and demand.

*Supply, Demand and Prices*

As we go to press, copper prices have recovered somewhat from this summer's correction, in part because of a possible labor strike at Chile's Escondida mine. This is characteristic of all base metals; numerous factors, including political and labor unrest, and even floods, affect the supply of base metals. In addition, *cranking up supply in the short term is usually impossible*; the process of prospecting, exploring and developing a mine takes many years, sometimes decades. The scale of most base metal mines is huge - they take an enormous amount of financing, require endless environmental permissions and need extensive infrastructure. These factors make it *very difficult to balance supply with demand in the short term* (meaning, up to a few years), creating frequent cycles of price increases when supplies tighten, followed by corrections when new supplies come online.

On the demand side, Asia, particularly China, has stayed in high gear, requiring prices to go up to match demand with supply. Some day soon, India will join the arena. The result has been rising prices.







Base metal prices during the last couple of years have risen faster than the price of precious metals, generating a lot of interest and excitement, even among mainstream investors. That's a sure sign to a contrarian of at least an intermediate high... though that doesn't mean they can't go higher before they correct. In fact, we wouldn't be surprised if they went to the sky, given price-insensitive demand and fixed supply and the involvement of hedge funds in the metals market. But any spike like that would be short lived, and for now we still see base metal prices as having gotten far ahead of themselves. In addition, we are bearish on the U.S. economy and are *not sure that China can pick up all the slack we see coming, especially with so much of their economy going into exports to the US*. At the same time, continually high prices have prompted everyone with assets that can be put into production quickly to move in that direction, so there could be a short-lived supply glut as that inventory of near-to-production assets come online.

*The Crystal Ball*

In the nearer long term (over the next decade or so), we're bullish on commodities, believing that we are in a super-cycle that corresponds to the 20-year bear market for commodities that started in 1980. In the medium range (3 to 5 years), we are also bullish, as anything that can be quickly dusted off will have been, and new discoveries will take longer to bring online. *In the short term (zero to 12, maybe 18 months) we see a high probability of economic woes leading to a major correction*. That will be our time to re-enter base metal plays aggressively.

Are we just guessing?

Not entirely. Consider the data from the futures market:

Copper for delivery in 27 months is US$5,590/tonne vs. the current US$7,260

Nickel: US$16,675 vs. current US$27,350

Zinc: US$2,293 vs. current US$3,125

Furthermore, as you can see from the production and consumption numbers in the table below, the higher prices have brought enough new supply online that base metals are not actually in a state of shortage at the moment.

*Base Metal Company Stocks*

Consequently, we are holding off on buying any new base metal company stocks, unless the company has something of such extraordinary potential that we don't want to wait, or if a company also has a lot of precious metals, which hedges our base metal bet.


----------



## dubiousinfo (15 August 2006)

*Re: Base Metals*



			
				BlueDaze said:
			
		

> Furthermore, as you can see from the production and consumption numbers in the table below, the higher prices have brought enough new supply online that base metals are not actually in a state of shortage at the moment.






The production and consumption numbers in the table (the table is in the original article but not shown in the post above) shows a deficit for both zinc & nickel. In fact it shows Zinc actually has a higher deficit this year than the same period last year.


----------



## rederob (15 August 2006)

*Re: Base Metals*



			
				dubiousinfo said:
			
		

> The production and consumption numbers in the table (the table is in the original article but not shown in the post above) shows a deficit for both zinc & nickel. In fact it shows Zinc actually has a higher deficit this year than the same period last year.



Some people clearly don't interpret the data before they put pen to paper.
Every base metal is presently experiencing warehouse declines.
This is not the trend for northern summer - all warehouses should be showing stock build.
Why?
because demand continues to outpace supply despite the high metals prices.
I am more bullish now than I was this time last year on the metals and associated equities.  Some good times will roll into our 4th quarter.
Sit on the side lines and watch profits forgone, or jump in and enjoy the ride!


----------



## brerwallabi (16 August 2006)

Rederob
Hear hear, actually we should change the title of this thread to when will commodities recover.


----------



## rederob (16 August 2006)

brerwallabi said:
			
		

> Rederob
> Hear hear, actually we should change the title of this thread to when will commodities recover.



Brother marsupial
Zinc bounced of its lower trend line a few days ago and held a few cents gain last night.
I expect a complete upside break will occur late August to early for base metals.
Until then we can cop a little more volatility as physical demand for metal is comparatively light and prone to get "rolled" by the odd speculator profit taking or going shorter still.
Escondida remains a wild card; if the strike goes beyond this week then the jigs up and copper prices will soar into next week - the supply chain shortfall simply cannot cope with about 5% of daily metals output being withdrawn in such a tight market.


----------



## Freeballinginawetsuit (19 August 2006)

wayneL said:
			
		

> I was speaking to a friend who is a BigKnob of one of the major mining companies up here in Geraldton today. We were talking about interest rates/real estate etc. when out of the blue, unsolicited from me, he starts talking about the mining boom.
> 
> (I never say say anything bearish around mining folk)
> 
> ...





Typical comment from a bear. 3 Years into a comodities boom fueled by a country with over a billion chinese and you think its over. If thats the case why don't the chinese keep on buying the hematite ore from BHP and RIO and forget about investing in the poor mans manganite ore of GBG etc thats up in your neck of the woods. They have to build expensive value added pellet/hbi plants for manganite and the Chinese are investing heavily in these mid cap ore companies.

The answer is they know they need commodities for many years to come and don't want to get ripped off any longer by the big boys.

Go the commodity bulls for sure, for a few more years yet


----------



## wayneL (19 August 2006)

Freeballinginawetsuit said:
			
		

> Typical comment from a bear. 3 Years into a comodities boom fueled by a country with over a billion chinese and you think its over. If thats the case why don't the chinese keep on buying the hematite ore from BHP and RIO and forget about investing in the poor mans manganite ore of GBG etc thats up in your neck of the woods. They have to build expensive value added pellet/hbi plants for manganite and the Chinese are investing heavily in these mid cap ore companies.
> 
> The answer is they know they need commodities for many years to come and don't want to get ripped off any longer by the big boys.
> 
> Go the commodity bulls for sure, for a few more years yet




My My My! Why are permabulls so freakin' touchy....scared money?

Who said I'm a commodity bear anyway ffs? 

I'm merely reporting what I was told from an *INSIDER*

Don't shoot the messenger mate.

For the record, I am longterm bullish on commodities. I am medium term bearish on some metals, but bullish on just about any other commodity you care to name.

SO GET OFF MY BACK!


----------



## rederob (19 August 2006)

wayneL said:
			
		

> My My My! Why are permabulls so freakin' touchy....scared money?
> 
> Who said I'm a commodity bear anyway ffs?
> 
> ...



A bit "touchy", Wayne - not a bear with a beer headache, I hope!
Now you could have interpreted this message from your *INSIDER * and added your view to it.
All I know is that every bull market has come to an end, so repeating the bullish view is fraught with getting caught out.
The opposite, however, might see one as a market savant if the timing of a turnaround gets nailed by one's lucid post.
If, historically, you read the economic tea leaves then you will know interests rates are far to low at present to spell global economic doom.  The Yanks would probably say we are just into the second innings - based on the Fed's intention to slow the pace of further increases due to an apparent contraction of inflationary pressures.  Anyone following baseball will know it's a pretty dull game most of the time - you can walk away and come back an hour later and nothing has changed on the scoreboard.  The "plays" change, however, and it is these subtleties that one needs to watch most closely, as they determine the final outcome. In a long waiting game, patience is a principal virtue.


----------



## 2020hindsight (19 August 2006)

rederob said:
			
		

> All I know is that every bull market has come to an end, so repeating the bullish view is fraught with getting caught out.
> The opposite, however, might see one as a market savant if the timing of a turnaround gets nailed by one's lucid post.
> If, historically, you read the economic tea leaves then you will know interests rates are far to low at present to spell global economic doom.  The Yanks would probably say we are just into the second innings ...




Interesting posts here gents.  Thanks. Philosophical to boot.  I guess there are 7 innings in a full baseball game? So one could say we are just warming up(?)  In general I think discussions on shares are generally bullish, reminds me of Pamploma - bulls chasing bulls, and newchums like me being caught up in the current.   Meanwhile a handful of bears sleep through the whole thing.

As they say optimists are not always more correct than pessimists, but usually happier because they are "hooked on hope".  Personally Ive got CBH up to my ears. Not that I know what Im doing. 

Speaking of baseball, it would be intersting to know the strike rate for typical posts here - when viewed in hindsight.  Is there a bullish bias?


----------



## rederob (19 August 2006)

2020hindsight said:
			
		

> Speaking of baseball, it would be intersting to know the strike rate for typical posts here - when viewed in hindsight.  Is there a bullish bias?



2020
"Bullish" to a "t".
That's what I usually see.


----------



## 2020hindsight (19 August 2006)

wayneL said:
			
		

> (I never say say anything bearish around mining folk)
> Anyways he says and I quote "I give another 12 months max"
> 
> Maybe a fair summary would be that we should consider the three options :- old bull, young bull, and bear.  Patient old bulls seem to be pretty contended in my experience.   Can be bloody frustrating for young bulls.  Maybe review all this in 11 months time. (?)
> ...


----------



## wayneL (23 August 2006)

rederob said:
			
		

> A bit "touchy", Wayne - not a bear with a beer headache, I hope!
> Now you could have interpreted this message from your *INSIDER * and added your view to it.
> All I know is that every bull market has come to an end, so repeating the bullish view is fraught with getting caught out.
> The opposite, however, might see one as a market savant if the timing of a turnaround gets nailed by one's lucid post.
> If, historically, you read the economic tea leaves then you will know interests rates are far to low at present to spell global economic doom.  The Yanks would probably say we are just into the second innings - based on the Fed's intention to slow the pace of further increases due to an apparent contraction of inflationary pressures.  Anyone following baseball will know it's a pretty dull game most of the time - you can walk away and come back an hour later and nothing has changed on the scoreboard.  The "plays" change, however, and it is these subtleties that one needs to watch most closely, as they determine the final outcome. In a long waiting game, patience is a principal virtue.




Red

There is more in this "ball game" than interest rates. Even so, there are alternative interpretations to the low interest rate environment.

As far as adding my view... FWIW I agree that mining in WA will be in deep doodoo in the relatively near future, even I was surprised at the 12 month timeframe. I had 2-3 years in mind for the poo to really hit the propeller.

But just on small pedantic point. Bears never have headaches. True bears are actually masters of disguise and at times, indiscernable from the most rampaging, drooling and obnoxious bull.

Even when caught wearing his/her true personna at the wrong time, the result is more likely to be a severe gash to the soft underbelly, rather than a headache.

Also bear (no pun intended) in mind that a bear is only a bear so he/she can be a bull in the future.

Cheers


----------



## rederob (23 August 2006)

Wayne
From a cyclical sense it is more obvious by the month that we are nearing an end after several years strength.
The issue for investors is if it is a short term retraction within a giant commodity bull, or an end to bull run for another decade or so.
There can be no doubt that ramped up production will overrun markets in late 2007/2008 and excess supply will smash prices.
However, our market is a bit lumpy right now and we are seeing separate metals "run", rather than all move relatively the same direction.
In this light we could see iron ore the first metal to slump, perhaps followed by coal, then copper, then aluminium etc: And the time frames may be right out of whack so that the overall "bearish" influence over the commodity tone is muted.
What I certainly believe is that the true commodity bull is years away.  It will occur after China's infrastructure growth spurt is largely over, and its population turn into consumers: While at the same time India transmogrifies itself into a fledgling first world country by running an infrastucture build and consumer economy in tandem.  2.5 billion people will weigh heavier on global markets than anything we have seen, ever.


----------



## Sean K (23 August 2006)

rederob said:
			
		

> Wayne
> From a cyclical sense it is more obvious by the month that we are nearing an end after several years strength.
> The issue for investors is if it is a short term retraction within a giant commodity bull, or an end to bull run for another decade or so.
> There can be no doubt that ramped up production will overrun markets in late 2007/2008 and excess supply will smash prices.
> ...




I agree rederob, only as long as the US can get Chindia to the point where the middle classes have expanded to a point where they are are self sustaining the economy. Hopefully this can occur in sync with metal supply/demand, but, as you have indicated this is probably doubtful. There will be a cycle, but how big a down turn is a best guess.


----------



## wayneL (23 August 2006)

rederob said:
			
		

> Wayne
> From a cyclical sense it is more obvious by the month that we are nearing an end after several years strength.
> The issue for investors is if it is a short term retraction within a giant commodity bull, or an end to bull run for another decade or so.
> There can be no doubt that ramped up production will overrun markets in late 2007/2008 and excess supply will smash prices.
> ...




Red,

Makes perfect sense. 

Thanks for the analysis.

Cheers


----------



## rederob (19 February 2019)

rederob said:


> What I certainly believe is that the true commodity bull is years away. It will occur after China's infrastructure growth spurt is largely over, and its population turn into consumers: While at the same time India transmogrifies itself into a fledgling first world country by running an infrastructure build and consumer economy in tandem. 2.5 billion people will weigh heavier on global markets than anything we have seen, ever.



Over ten years later and where are we?
Well, India and China are now at 2.8billion - so I was "out" by the population of the USA on that one .
Between then and now there was the BRIC phenomenon, but it seems only the IC have powered through.
On commodities alone there are some very interesting fronts, and the newest are carried-in on electric vehicles.
Lithium has been seen by many as a big power play (excuse pun) with the largest and cheapest producers globally set to continue to do well.  Never a race I joined, so shall leave comment on this metal to those better informed.  All I know is that from a supply perspective it's well endowed.
Other battery metals become problematic.
Cobalt as a stand alone mine barely exists outside of corrupted African countries, so no joy for me there.
Nickel is doing ok, and could do a lot better as battery chemistry substitutes cobalt for the cheaper nickel metal.  LME warehouse levels have been in strong decline for a year, dropping from around 350K tonnes a year ago to 200K tonnes today.
On the EV front, copper demand will continue apace and mine supply looks like struggling when trying to balance this new feed with existing uses of the remarkable metal. Comex warehouse trends look dire compared with LME.  Comex has dropped 25k tonnes in the last month (to now sit around 70K tonnes), while LME is up 15K tonnes in the month.  This, however hides a 200K decline in the past 12 months.  My sense is that the LME warehouses are likely to continue to lose metal through this year.  I base this largely on the US/China trade imbroglio which has seen investment decisions take a back seat in recent months.
Lead has been the most recent surprise, dropping over 40K tonnes in 2 months to leave LME warehouses at just under 70K tonnes.   I am clueless as to why.  However, with LME stocks their lowest for as long as I can recall it's an interesting omen.
My cake icing is zinc.  5 years ago LME zinc levels were in excess of 800k tonnes. Today they are just over 90k tonnes, and falling at an unusual pace.  Zinc is significantly an industrial metal, and with such a rate of decline it might be telling us that "business as usual" in the rest of the world really means that metals as a whole are now in a firm state of undersupply.
I will leave iron ore and aluminium out for now, and see if there is another story they are telling.


----------



## rederob (3 March 2019)

Zinc and copper remain very tight with LME inventories continuing their rapid decline.
Comex copper was down 30K tinnes over the month with prices rising 5.6% during the week.
LME warehouse levels declined a lesser 20K tonnes and LME copper prices rose only 4% over the week.
Nickel drawdowns are steady, but warehouse levels are ample, unlike Cu and Zn.
Diversified miners should get a perk up this month if the metal markets continue their trends.


----------



## Smurf1976 (3 March 2019)

rederob said:


> My cake icing is zinc.  5 years ago LME zinc levels were in excess of 800k tonnes. Today they are just over 90k tonnes, and falling at an unusual pace.



Something to be careful of when it comes to investing is that zinc as it is mined is a very different thing to zinc that is actually useful.

To get from one to the other at a high purity level requires electrolytic smelting, an expensive and energy-intensive process that's generally not done where the ore is mined.

Point being that a company with a zinc mine can't sell zinc to anyone, all they can sell is ore to a smelter. The financial details of contracts etc will determine who is getting the benefit of rising prices - could be the miner or could be the smelter or could be both.


----------



## rederob (4 March 2019)

Smurf1976 said:


> Something to be careful of when it comes to investing is that zinc as it is mined is a very different thing to zinc that is actually useful.
> 
> To get from one to the other at a high purity level requires electrolytic smelting, an expensive and energy-intensive process that's generally not done where the ore is mined.
> 
> Point being that a company with a zinc mine can't sell zinc to anyone, all they can sell is ore to a smelter. The financial details of contracts etc will determine who is getting the benefit of rising prices - could be the miner or could be the smelter or could be both.



Zinc  producers will either deliver into spot, or a market agreed price.  By way of example, here's a contract from December 2018 for MMG Dugald River outlining terms.
In any case, the TC/RCs are a  small portion of the sale price - less than 10 cents/lb, whereas zinc prices increased 15 cents in the last 6 months.  Here is an interesting article from last May about TC/RCs.  Especially interesting in that article was the part about "tightness".  Last May LME zinc warehouses had almost 230K tonnes on warrant with cancellations of around 10K tonnes.  Today these warehouses have only 52K tonnes on warrant with 12K tonnes cancelled.  (Remember that just 5 years ago there was over 800k tonnes in warehouses - ie over 15 times as much as today.)
I only use LME data as a barometer: it shows trends.  If industry is oversupplied LME warehouse levels will build, or seesaw.  The trend for zinc has been of very long term deficit, and the supply side response simply is not there and has not been there for the past 5 years.


----------



## finicky (4 March 2022)

Some guy called  'Julian' on twitter expresses that the *trend break out* of this etf *XME* ratioed against the etf *SPY* on the daily chart could have "implications that are utterly profound". Wouldn't the word 'major' do?   Not for utterly profound Julian. Of course everyone who reads his tweet knows what XME and SPY are - no need to over explain for the plebs. Looking them up I found that XME reflects metals and miners, SPY is the etf of S&P500 (SPX). He does admit the break might be false based on the Ukraine Hitler fiasco. It's just another take that commodities are gaining ground on general equities.

Note this chart is just the XME, not XME:SPY ratio chart mentioned and it is monthly not daily

All Data Monthly - nice chart!


----------



## Sean K (5 March 2022)

You just need to look at the right hand column on these tables to see what's happened and likely to continue imo. Hard to put a timetable on it. Gold and silver have only just began and have some catching up to do.


----------

