Commodities Super Cycle - Do you believe in it?

[michael_selway]

Re: Commodities Super Cycle- Do you believe in it?

sugar the NEXT big mover?? it HAS moved heaps already...
tend to agree with the rest... OXR is making big money, maybe $1million a day NETT...
any predictions on zinc?
maybe $1.50/lb

yeah sugar maybe not as Crude looks to be steady for a long time to come

http://www.nymex.com/lsco_fut_csf.aspx (crude) - Steady 60+

Btw how did u get OXR 1 mil a day net?

thx

MS

 

[nizar]

Re: Commodities Super Cycle- Do you believe in it?

Btw how did u get OXR 1 mil a day net?

Sepon:
a) Gold: 200,307oz @ cost of us$201/oz
net revenue = 200,307*(550-201)*0.74 = au$51,731,285

b) Copper: 60,000tonnes @ cost of us$1.00/lb
net revenue = 60,000*2.2*1,000*(2.20-1.00)*0.74 = au$117,216,000

Golden Grove:
c) Zinc: 130,000tonnes @ cost of us$0.32/lb
net revenue = 130,000*2.2*1,000*(1.00-0.32)*0.74 = au$143,915,200

d) Copper: 10,000tonnes
net revenue = 1/6*b = au$19,536,000

e) Gold: 40,000tonnes
net revenue = 40,000*(500-201)*0.74 = au$10,330,400

Total = au$342,728,885

Tax @ 30% = au$102,818,665

NPAT = au$239,910,220

Per day = au$657,288

so i was way off, my bad, but still a good figure. PLus i didn't consider silver from GG which is 3million oz and lead at 8,000tonnes coz they didnt have costs in UK presentation. That's where i got all my figures from.

And i used Cu at 2.20, Zn at 1.00, and gold at 550, aud to usd ex rate of 0.74

also, by 2008
Prominent Hill to add 90-100,000 tonnes of Cu, 110-130,000 tonnes of Zn and 420,000 oz of gold

Sepon Cu output will double by 2009...

So good times ahead for the Ox..

 

[michael_selway]

Re: Commodities Super Cycle- Do you believe in it?

Sepon:
a) Gold: 200,307oz @ cost of us$201/oz
net revenue = 200,307*(550-201)*0.74 = au$51,731,285

b) Copper: 60,000tonnes @ cost of us$1.00/lb
net revenue = 60,000*2.2*1,000*(2.20-1.00)*0.74 = au$117,216,000

Golden Grove:
c) Zinc: 130,000tonnes @ cost of us$0.32/lb
net revenue = 130,000*2.2*1,000*(1.00-0.32)*0.74 = au$143,915,200

d) Copper: 10,000tonnes
net revenue = 1/6*b = au$19,536,000

e) Gold: 40,000tonnes
net revenue = 40,000*(500-201)*0.74 = au$10,330,400

Total = au$342,728,885

Tax @ 30% = au$102,818,665

NPAT = au$239,910,220

Per day = au$657,288

so i was way off, my bad, but still a good figure. PLus i didn't consider silver from GG which is 3million oz and lead at 8,000tonnes coz they didnt have costs in UK presentation. That's where i got all my figures from.

And i used Cu at 2.20, Zn at 1.00, and gold at 550, aud to usd ex rate of 0.74

also, by 2008
Prominent Hill to add 90-100,000 tonnes of Cu, 110-130,000 tonnes of Zn and 420,000 oz of gold

Sepon Cu output will double by 2009...

So good times ahead for the Ox..

Wow thx, ill look into it, the presentation

Btw NPAT is that excluding fixed costs? capex? depreciation?

thx

MS

 

[RichKid]

Re: Commodities Super Cycle- Do you believe in it?

Not over yet if this chart is anything to go by, this time period is too short imo to get a clear picture of it all but I couldn't find data for the earlier years (ie going back 75yrs+), not sure if they can calculate it that far back...

 

[dodgers]

Re: Commodities Super Cycle- Do you believe in it?

Just been looking back at that Jim Rogers interview...

anyone know a good way to gain exposure to agricultural commodities...sugar, grain, coffee etc

cheers

 

[RichKid]

Re: Commodities Super Cycle- Do you believe in it?

Just been looking back at that Jim Rogers interview...

anyone know a good way to gain exposure to agricultural commodities...sugar, grain, coffee etc

cheers

Hi dodgers,

You could try large co's which produce those or try shorting stocks adversely affected by rises in those prices. You would have to do some research to see if there is any correlation. The ASX has some cotton producers (Namoi, Qld cotton etc). Maybe CFD's for direct exposure??

There are also 'commodity warrants' (search ASF for the term) but again you need to know exactly how those instruments work or you will get burnt, they are risky instruments. Might be more references to the same question and Jim Rogers on ASF, try the search tool. I haven't been following the soft commodities so can't comment on how bullish they are compared to the metals.

 

[dodgers]

Re: Commodities Super Cycle- Do you believe in it?

Thanks Richkid

I'll do some research and let you know if I find anything interesting. Like most people here I've been investing in resources / miners for the last couple of years. Apart from sugar however I haven't heard much on any other agricultural commodity. I guess we're in the wrong country. A friend of mine is trading them in the states but there's no market here. Will see if I can find anything.

 

[michael_selway]

Re: Commodities Super Cycle- Do you believe in it?

Just been looking back at that Jim Rogers interview...

anyone know a good way to gain exposure to agricultural commodities...sugar, grain, coffee etc

cheers

Sugar - CSR
Grain - AWB
Cotton - QCH

My favs

thx

MS

 

[nizar]

Re: Commodities Super Cycle- Do you believe in it?

Copper, Zinc Climb to Records in London Amid Supply Concern

April 10 (Bloomberg) -- Copper rose to a record, leading a rally in metals as investors bet returns on commodities will beat those on stocks and bonds. Zinc climbed to the highest ever, and nickel jumped the highest since 1989.

Copper rose after the government failed to intervene in a 17- day strike at Grupo Mexico SA's La Caridad mine, the nation's second-largest copper mine, while a leak at a Lonmin Plc platinum plant in South Africa disrupted production. Rising demand from hedge and mutual funds has helped drive copper 79 percent higher in the past 12 months. Zinc has more than doubled.

``The demand story is very robust,'' said Alfred Wong, who helps manage $12 billion at UOB Asset Management in Singapore. , ``We are quite upbeat.''

Copper for delivery in three months rose $185, or 3.2 percent, to $5,910 a metric ton on the London Metal Exchange, after earlier reaching a record $5,965. Zinc jumped $100, or 3.6 percent, to $2,911 a ton after reaching a record $2,927. Nickel climbed 3.4 percent to $17,425 a ton after reaching $17,650, the highest since March 1989.

On the Comex division of the New York Mercantile Exchange, copper for May delivery climbed 6.85 cents, or 2.6 percent, to $2.709 a pound ($5,973 a ton) after reaching $2.712. Prices reached a record $2.7275 after the close of floor trading.

A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.

The work stoppage at Grupo Mexico's La Caridad copper mine continued over the weekend with no intervention from the Mexican government, spokesman Juan Rebolledo said yesterday. The strike over improved conditions and new contracts began March 24.

Commodity Rally

The Goldman Sachs Commodity Index, which includes copper, zinc and gold, has advanced 22 percent in the past year, more than double the gain in the Standard & Poor's 500 Index of stocks. Benchmark U.S. Treasuries have lost investors about 1.6 percent this year, according to Merrill Lynch & Co. indexes.

Precious metals climbed with gold on the Comex closing above $600 for the first time in 25 years. Silver gained for the third- straight session, extending a rally to a 22-year high.

Gold futures for June delivery rose $9.10, or 1.5 percent, to $601.80 an ounce, more than making up for the 1.2 percent drop on April 7. The metal is up 16 percent this year.

Silver for May delivery rose 49 cents, or 0.9 percent, to $12.56 an ounce. Prices have surged 72 percent in the past 12 months.

Pittsburgh, Pennsylvania-based Alcoa Inc., the world's largest aluminum producer, is expected to report today a jump in first- quarter profit because of higher prices. Aluminum, which reached a 17-year high of $2,678.10 a metric ton on the LME Feb. 7, today rose $34, or 1.3 percent, to $2,574 a ton.

Economic Growth

The booming economies of China and India are stoking demand for the raw materials needed for factories, cars and appliances. China's economy expanded 9.9 percent last year and is headed for similar growth this year.

The International Monetary Fund said last week it may raise its forecast for global economic growth this year. The world economy may expand 4.9 percent, it said April 3. It forecast on Sept. 21 that growth would be 4.3 percent.

``For the first time in 15 years, all major economies are growing together in both North America, China and Europe,'' said John Kemp, an analyst at Sempra Metals in London.

Kemp forecasts copper may rise to as high as $7,000 a ton this year. Gary Lampard, an analyst at Canaccord Capital Inc., Canada's largest independent brokerage, increased his forecasts for base- metal prices. The gains are being ``heavily influenced by speculative activity,'' he wrote in a report today.

Investment Funds

Fund investments in commodities are forecast by Barclays Capital to climb by more than a third to $140 billion this year. Merrill Lynch said Feb. 8 money managers should invest directly in commodities, rather than energy and mining stocks, to take advantage of rising prices.

Copper inventories monitored by the LME has dropped for six consecutive trading days, shedding 8.3 percent to 111,800 tons. That's less than three days of global consumption. Zinc stockpiles have plunged 53 percent in the past year to 267,650 tons, equal to less than 10 days of global consumption.

Nickel gained amid disruption to the building of Inco Ltd.'s Goro project in New Caledonia. Goro, due to produce 60,000 tons a year by late 2007, is being hampered by protests of anti-mine activists. Investors also are stocking up before a labor contract expires at Inco's main operations in Canada in May, said Maqsood Ahmed, an analyst at Calyon Corporate and Investment Bank in London.

A three-month strike at Inco's Ontario mine from June 2003 sent prices to more than a three-year high that year.

Inventories of nickel fell for the seventh straight trading day, declining 10 percent in the period to 29,430 tons, LME data shows. That's less than eight days of global consumption.

Platinum rose $29, or 2.7 percent, to $1,094.50 an ounce in London, after earlier reaching $1,095.50.

http://www.bloomberg.com/apps/news?pid=10000081&sid=ar216_xef.kQ&refer=australia

 

[dodgers]

Re: Commodities Super Cycle- Do you believe in it?

Thanks MS

Started a new topic on commodity cycles...hoping it might get some interest going...china's gotta start ramping up their food intake habits, not just their construction/building habits soon.

 

[michael_selway]

Re: What Year Did You Start Investing/Trading In The Stockmarket?

So where do you see us going this time round?

Good Point

I think we are at a stage called "bubble territory". No real fundamentals, just follow commodity prices. So a crash is inevitable. However it needs to go high enough to trigger a calapse. That is, a "superspike" is a beginning of the end. However atm, bubble is not big enough.

IMO, i think market crash will occur in 2007 or 2008, latest after Beijing Olympics.

All Ords Terminal Value would need to be 6000-7000 points by then. Crash say to about 4000 points i can see it. Then it will take at least 10 yrs if ever to reach that high point again. See graph below, it was not till 1997 that All Ords cleary passed the 1987 pre crash high. Look at Nasdaq 2000 Tech Wreck as well, hasnt reach its all time high yet...

http://www.depression2007.com

The person predicting depression in 2007 is not far off it appears now

What are your thoughts?

Thx

MS

 

[nizar]

Re: What Year Did You Start Investing/Trading In The Stockmarket?

Good Point

I think we are at a stage called "bubble territory". No real fundamentals, just follow commodity prices. So a crash is inevitable. However it needs to go high enough to trigger a calapse. That is, a "superspike" is a beginning of the end. However atm, bubble is not big enough.

Look at the graph posted by Nick Radge in the "Is this as good as it gets" thread... history shows it can get alot better before coming down.

IMO, i think market crash will occur in 2007 or 2008, latest after Beijing Olympics.

Im keen to know why u have maintained this theory, about Beijing Olympics being the driver of metals demand. This is NOT THE CASE. From 1960-1980 was the period where Japan underwent industrialisation and commodity prices were in a 20-year bullmarket. THe current bullmarket is due to the people of INdia and CHina, totaling 2.3billion people, are pulling themselves out of poverty and begin to modernise their lifestyles. There are no Olympics in India, and alot of the demand is coming from here, and there was actually Tokyo 1964 Olympics and i guess not long after this the DOW started went down... but this is likely to be a coincidence and i think THERE IS NO CORRELATION...THis is why economists and analysts like MArc Faber and Doug Casey and many others think that we are just at the beginning of another bullmarket which would last 20 or so years, because of the scale ie. the sheer number of people, prices will be heading upwards... this bullmarket will be much more than Japan-fuelled one of the 1960s and 1970s...

The only thing that can cause a market crash and maybe a recession even, is is high oil prices spike up and maintain at high levels...

JUst my view... but beware, when commodites went sick from 1960-1980, this was at a time when equity markets suffered, ie DOW went sideways from 1966-1982, except for the Japanese market, which soared and from 1960-1990 it went up 17-fold while the DOW only doubled....

So commodity prices are going up for a while yet, and equity markets may crash but this will have nothing to do with Beijing Olympics, IMO...

http://www.blastinvest.com/article/04_28_2005.htm

Think of China and India, for example. China is the world’s leading exporter and is developing an enormous manufacturing base unequalled in world history. The Chinese people are slowly growing more prosperous over time and are starting to demand more commodities, everything from oil to transport goods to food to lumber to increase their standard of living. With over a billion Chinese striving for American standards of per-capita commodity consumption, this current Great Commodities Bull ought to dwarf any other in history!

And India has another billion people of its own, with the same hopes and dreams as the Chinese or American people to create better lives for themselves and increase the standard of living for their children. The Indians are training the best engineers and scientists in the world today, and their stellar standards of education make American public schools look like illiterate day-care playgrounds. As the Indians start to earn and consume like Americans, their demand for commodities will be insatiable as well.

If you can imagine over two billion Asians seeking to live and enjoy the abundances of life like we Americans do today, and we are less than one-seventh of this number, it is not hard to understand why we are almost certainly in the earliest stages of a breathtaking commodities superbull!

Cyclically we are emerging from a brutal bust and multi-decade commodities bottom in late 2001, with nowhere to go but up. Psychologically there was no major investment class more hated than commodities only a few years ago, a contrarian’s dream. Fundamentally vastly insufficient capital has been invested in commodities production for the past decade, so economically commodity supply cannot keep up with global demand for many years to come.


Geopolitically, there are over two billion Asians working beyond hard to bring an American standard of living to their families. They will need to collectively consume unthinkable amounts of commodities to chase this dream. From an inflation perspective, governments around the world are multiplying their paper currencies like there is no tomorrow, so there is more and more paper floating around for every given unit of commodities, driving up their nominal prices around the globe.


Can you imagine a better recipe for a commodities superbull? I doubt that we could craft a more bullish scenario if we tried!

http://www.zealllc.com/2004/combull2.htm

Look at this interview with Jim Rogers: http://www.investmentu.com/IUEL/2005/20050725.html

 

[YOUNG_TRADER]

Re: What Year Did You Start Investing/Trading In The Stockmarket?

Im keen to know why u have maintained this theory, about Beijing Olympics being the driver of metals demand. This is NOT THE CASE. From 1960-1980 was the period where Japan underwent industrialisation and commodity prices were in a 20-year bullmarket. THe current bullmarket is due to the people of INdia and CHina, totaling 2.3billion people, are pulling themselves out of poverty and begin to modernise their lifestyles. There are no Olympics in India,

Just to point out that India has the 2010 CommonWealth Games

 

[nizar]

Re: What Year Did You Start Investing/Trading In The Stockmarket?

Just to point out that India has the 2010 CommonWealth Games

OOoops sorry my bad, but does any1 really think this is the main driver of demand ?

I just questioned it coz i never read it anywhere thats all..

Keen to hear thoughts..

 

[michael_selway]

Re: What Year Did You Start Investing/Trading In The Stockmarket?

OOoops sorry my bad, but does any1 really think this is the main driver of demand ?

I just questioned it coz i never read it anywhere thats all..

Keen to hear thoughts..

Hi Nizar, i just think the the Beijing Olympics, is the "Super Dirver" of demand for commodities right now in China. Btw Commonwealth Games is no where near as robust as what Olympics Games can bring to an economy, literally billions in GDP growth.

so after that, its not going to drop to 0 or anything, just a slow down in demand. However this small retreat will trigger a collapse. It makes sense. You can say a HUGE correction rather than a Bear Market, if you wish. Also supply response will come on board, as you have said KZL, copper production increases dramtically by then.

But thanks IMO only

Thanks

MS

 

[noirua]

Re: What Year Did You Start Investing/Trading In The Stockmarket?

Hi Nizar, i just think the the Beijing Olympics, is the "Super Dirver" of demand for commodities right now in China. Btw Commonwealth Games is no where near as robust as what Olympics Games can bring to an economy, literally billions in GDP growth.

so after that, its not going to drop to 0 or anything, just a slow down in demand. However this small retreat will trigger a collapse. It makes sense. You can say a HUGE correction rather than a Bear Market, if you wish. Also supply response will come on board, as you have said KZL, copper production increases dramtically by then.

But thanks IMO only

Thanks

MS

Hi M_S, Your comments make a lot of sense and the following link seems to take a similar view, on cost: http://www.asianresearch.org/articles/2346.html

 

[metric]

this thread is 3 years old. but more relevant than ever. i believe precious metals are about to move into a super cycle, but it seems others believe all commodities will, including food, and minerals. lack of confidence in the us dollar could see more investment into gold and silver. demand in china and a re merging US may see minerals prices skyrocket, and the world wide shortage of corn, rice, wheat and other grains will see these commodities prices fly also. most of this is already being mentioned in the news. so i think yes, a super cycle is about to kick in.

I am genuinely moving into the "crazy" and very small camp that believes the genuine "super spike" in commodities could evolve later this year. That is completely contrary to the consensus view of imminent commodity price collapse. I can't think of one domestic investor who is positioned in the equity market for the "super spike" scenario, but I can name dozens who are positioned for the commodity price collapse scenario. Let's see what comes, but remember you never overtake anyone by staying in the same lane. It's probably also not wise to drive head on into a billion urbanising Chinese!
Charlie Aitken
Director
Head of Institutional Dealing
Southern Cross Equities

 

[wayneL]

Times economics columnist Anatole Kaletsky is not my favourite writer. Only 4 months ago he was one of the leading property market cheerleaders and chief protagonist for the perpetual and permanent boom.

He seems to have come to his senses lately, facing the reality of current conditions. He still puts in some clangers with self defeating logic and circular argument, but this time he's written a blinder in my opinion.

He still gives me the sh!ts, but check this article:

http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article3980797.ece

Discuss

They're wrong about oil, by George
Rip up your textbooks, the doubling of oil prices has little to do with China's appetite
Anatole Kaletsky

SNIP:

Just as the credit crunch seemed to be passing, at least in the US, another and much more ominous financial crisis has broken out. The escalation of oil prices, which this week reached a previously unthinkable $130 a barrel (with predictions of $150 and $200 soon to come), threatens to do far more damage to the world economy than the credit crunch.

SNIP:

The present commodity and oil boom shows all the classic symptoms of a financial bubble, such as Japan in the 1980s, technology stocks in the 1990s and, most recently, housing and mortgages in the US. But surely, you will say, this commodity boom is different? Surely it is driven by profound and lasting changes in global supply and demand:

SNIP:

To see that these “fundamentals” are all irrelevant, we have merely to ask which of them has changed in the past nine months. The answer is none. The oil markets didn't suddenly discover China's oil demand nine months ago so this cannot explain the doubling of prices since last August. In fact, China's “insatiable” demand growth has decelerated.

SNIP:

The people who tell you that commodity prices today are driven by “economic fundamentals” are the same ones who said that house prices in Britain were rising because of land shortages. The amazing thing is that just months after losing hundreds of billions in the housing and mortgage bubbles, investors and governments around the world have reverted to the discredited fallacy that financial markets always reflect economic reality, instead of the boom-bust cycles and misconceptions that George Soros's book vividly describes.

 

[cuttlefish]

I'm not sure I agree. In my opinion the bubble that is collapsing at the moment, and has the potential to collapse in a spectacular way, is the $USD bubble. The USD has been accepted as the reserve currency and held its status/value for decades in spite of massive growth in US debt levels. Thus I see this as just the beginning of oil, gold and other commodity price rises. The rises will be driven by both the direct re-rating of prices based on a lower USD, inflationary effects of new money in the system, and also the flight of capital out of USD to hard assets.

 

[Schmuckie]

Donald Coxe, a global porfolio strategist for BMO Financial Group is a rather "mature" individual who has seen it all. He's comparing the current commodities boom to the 1950s. Except that the 1950s are now happening in the developing world, where with growing prosperity there's demand for durable goods and a rising standard of living. He compares it to the post-depression, post-war period in the developed world.

Every month his group publishes Basic Points, a very lively, and often times contrarian, view of the world.

Someone has picked up the February 2008 Basic Points here: http://laurenstephens.net/uploads/cd729b71b7.pdf

It's a long read, and his 2003 look at the commodities market is reprinted before his 2008 update, so it's long, but it's a fun read.