Commodities tipped to collapse

[ducati916]

An article regarding the takeover offer.

Is Freeport-McMoRan's Offer Enough?
Some analysts think a higher price is in order for the mining company's purchase of Phelps Dodge
by Aaron Pressman and Sonja Ryst


The rapidly consolidating global mining industry now has two more major players planning a trip to the altar. On Nov. 20, Freeport-McMoRan Copper & Gold (FCX) announced that it is buying Phelps Dodge (PD) for $25.9 billion, in an effort to grow its copper production. Worth about $126 a share, the offer represents a 33% premium for Phelps Dodge shareholders but still may be a bargain for Freeport, analysts said.

The two are creating the largest M&A deal in the mining sector's history, according to Thomson Financial. The new company, to be called Freeport-McMoRan Copper & Gold, will become the biggest copper producer in the world, passing Australia-based BHP Billiton (BHP). The deal, subject to shareholder and regulatory approval, is expected to close at the end of the first quarter of 2007.

Phelps Dodge has taken its shareholders on a wild ride this year, hitting an all-time high along with the price of copper in a spring rally and then subsequently selling off as the metal cooled. In June, Phelps tried to acquire Canadian nickel producer Inco in a $41 billion three-way merger that also included Falconbridge. But the deal fell apart in September after Brazil's Companhia Vale do Rio Doce (RIO) swooped in with a more appealing all-cash bid. Phelps shares started rising again in October after Atticus Capital, a New York-based money manager with a 10% stake in the company, said it was searching for someone to buy Phelps.

Better Offer Out There?
Analysts say the combination of Phelps Dodge's current operations, which brought in revenue of $8.7 billion and net income of $1.7 billion for the first nine months of the year, along with its untapped holdings around the world are worth far more than $126 a share. Prudential Equity Group analyst John Tumazos estimates Phelps Dodge is worth $182 a share, even as copper prices decline from more than $3.00 a pound to $2.00 in the next few years.

Tumazos expects major shareholders may balk at Freeport's offer in the hopes another buyer like Norilsk Nickel, Rusal, or even metal trading firm Glencore will enter the bidding. There's a "very large likelihood" that more than half of Phelps Dodge shareholders "reject any bid under $150 per share as inadequate or ridiculous," he says.

Standard & Poor's ratings analyst Thomas Watters said in a note issued Nov. 20 that given the current M&A activity in the sector, "it is quite possible further, more aggressive competing bids could emerge." S&P Ratings thinks a successful acquisition of Phelps Dodge would "markedly" enhance Freeport's position in the mining industry. "However, we are concerned about the combined entity's aggressive debt levels," said Watters.

Mining's M&A Explosion
If Freeport-McMoRan closes the deal with its current offer of $88.00 in cash plus 0.67 of a common share of the company for each Phelps Dodge share, the deal will immediately add to its earnings per share (EPS), the mining outfit said. Combined, the two companies expect almost $8 billion of earnings before depreciation, depletion, and amortization and $6.5 billion of operating cash flow in 2006.

Mining companies are gobbling one another up this year as commodities prices soar. Freeport-McMoRan's recent megadeal brings the total dollar amount of M&A in the industry so far in 2006 to $35.7 billion on 162 deals, according to Thomson Financial. During 2005, 118 deals only amounted to $1.6 billion.

Freeport-McMoRan is paying a 33% premium to Phelps Dodge's closing price on Nov. 17. Phelps Dodge shares surged 27% to $120.47 per share on Nov. 20. Freeport-McMoRan's share price fell 3.1% to $55.63 per share.

Giant Capacity
Demand for copper has been rising recently, and there aren't that many large copper development projects in supply. Freeport-McMoRan currently operates the copper and gold Grasberg mine in Papua, Indonesia. Phelps Dodge has mines in North America, South America, and Africa, including the Tenke Fungurume development project in the Democratic Republic of the Congo.

As a combined company, Freeport-McMoRan and Phelps Dodge think they can deliver nearly 1 billion pounds of additional copper production capacity in the next three years. Their projects include the expansion of Phelps Dodge's Cerro Verde mine in Peru, the development of the Safford mine in Arizona, a potential project to extend the life of the El Abra mine in Chile, the expected 2009 production from the Tenke Fungurume copper and cobalt project in the Democratic Republic of the Congo, and the expansion of Freeport-McMoRan's underground mine in Indonesia.

 

[rederob]

In point of fact, the whole argument that has been presented, is based upon the thesis of China and it's emerging hegemony. This argument is flawed in so many ways, and thus the argument for continued price rises in commodities carries inherent flaws.
jog on
d998

Well, I have seen folk trot out similar lines for 3 years now.
And for 3 years China has indulged in a commodity feast that has fed higher prices across th board.
Its a bit like in the morning being told the sun won't rise where you are pointing, because you weren't quite pointing in the right direction: And the sun rose....... again!
Now we discover China also has the world's largest US dollar reserves, overtaking Japan. I guess some economist will point out that on a per capita basis this is not such a big deal. Of course I would then point out to the economist that each person does NOT have an equal share.
There is nonsense, fabrication, calculation, mischief and stupidity in the markets, interspersed with very big money that always drives direction.
Much of that big money is joining the big party in town, in China.
Be there or be square!

 

[wayneL]

There is nonsense, fabrication, calculation, mischief and stupidity in the markets,

Lets not forget rhetoric, hyperbole and misinformation.

 

[ducati916]

enzo

Well, I have seen folk trot out similar lines for 3 years now.
And for 3 years China has indulged in a commodity feast that has fed higher prices across th board.
Its a bit like in the morning being told the sun won't rise where you are pointing, because you weren't quite pointing in the right direction: And the sun rose....... again!

Price 100% = China% + US% + Europe% + Asia% [India etc]

Therefore if you calculate the relative values as of GDP, and the associated increases/decreases, you will gain an insight into the change on the margin [100%] and thus potential changes in price.

jog on
d998

 

[dhukka]

Found this on kitco metals

The Coming Nuclear Winter Base Metals

http://www.kitco.com/ind/veneroso/nov062006.pdf

Read it and weep.

Thanks for the article wayneL, very interesting reading. I posted elsewhere on this forum recently about the similarities between this current resource boom and the tech boom. However I had to acknowledge that current high commodity prices where supported by the fundamentals. This report tears a hole right through that and for me is the final piece of evidence I need to prove that we are experiencing a period of seriously over inflated resource stock prices. Funny how times change, I remember the late 90's when noone would touch resource stocks with a barge pole, most gold producers couldn't cover the costs of extracting it from the ground. The cycle started to turn when I was still in the market in 2001 and now it looks as though it's ready to turn again.

The demand statistics were particularly telling, we've actually undergone a period of lower than the historical average level of demand for base metals yet prices continued to rise on the pretense of a glut. The further it goes the more unhappy the ending will be. The revelation of huge stock piles will send prices tumbling and hedge funds tumbling after them unable to unwind their positions, then the mass exodus as all the punters try to clamber through the mouse hole at the same time.

I'd be interested to see Veneroso's views on Oil and Uranium where there does seem to be a genuine supply shortage. Interesting times

 

[rederob]

enzo


Price 100% = China% + US% + Europe% + Asia% [India etc]

Therefore if you calculate the relative values as of GDP, and the associated increases/decreases, you will gain an insight into the change on the margin [100%] and thus potential changes in price.

jog on
d998

WOW
It's that easy!

I wonder what "price" that would be:
Bread?
Petrol?
Oil?
Zinc?
Silver?

 

[BSD]

China, the only party in town.
Based on what evidence?

The economic data would suggest that the largest player, by a country mile to be the US.

Demand will continue to rise. This seems an outright prediction.
Predictions tend to be dangerous as;
*They can be wrong
*They tie you psychologically to a bias

In point of fact, the whole argument that has been presented, is based upon the thesis of China and it's emerging hegemony. This argument is flawed in so many ways, and thus the argument for continued price rises in commodities carries inherent flaws.

jog on
d998

US GDP is greater than China's - but their effect on the copper market is not.

China have a centralised State that operate directly in the market to create outcomes for their industry. The Chinese government jawbone and participate directly in the market, the US government do not. The Yanks dont have a copper stockpile.

US industrial production is not growing at 10%+ per annum.

The hedge funds can leverage-up all they like, they cannot take on the Chinese government.

US demand is steady - their demand for copper is not the swing factor. The copper intensity per capita is not growing in the US - it is growing at an exponential rate in China.

In supporting my 'predictions' (essential if one is to have a view) some of the following points from a dealer note from the last couple of days have been important.

They make some decent points that you should account-for when getting worried about the effect of a US slowdown compared to the effect of Chindia in the medium to long term on global markets

• By 2020 almost 400 million people in China and India will move to cities. A multiple of the entire US population
• China and India will represent 37% of the entire world population and they will be growing wealth at a faster rate than the US population
• Chindia GDP will be double the Japanese economy and 60% of the US economy
• Chindia will represent 30-50% of global commodity demand

There will be bumps - but demand growth looks stunning. Regardless of a US slowdown or recession.

As for your valuation of Phelps, you may have difficulties extracting value if you use the same methodology that created your $9 BHP valuation.

I am of the view we are three years into a 20 year cycle being fuelled by demand from China.

As for supply, name one new Australian copper project of any scale to be brought to market beyond Prominent Hill that will have any effect on the global supply in the next three years.

 

[wayneL]

BSD,

I am a strong advocate of minimum prices in commodities. I.E when Ivory Coast Cocoa farmers started burning there crop in the streets in protest at prices, you can be pretty sure that that is pretty much the bottom.

Miners will close their mines, grain farmers will run sheep instead.. whatever. In other words when commodities become too cheap for producers to turn a profit, they'll cease production or do something else.

Basic stuff here. But I don't think anyone could disagree with this premise, therefore, we are all subscribers to the "minimum value theory", whether overtly aware of it or not.

Surely then, by default, we would have to recognise that there must be a maximum value for commodities. This is the point where producers increase supply and/or end users will try to find an economic alternative.

Where this is I do not know, but the signs will reveal themselves at the time it happens.

The commodities charts are littered with evidence of the above.

The thing is, the Chinese gu'mint being proactive as you say, I doubt will stand for perpetually increasing commodities prices. Maximum value will be reached at some point and the whole bull argument comes to an abrupt end.

Are we anywhere close to that? Buggered if I know, we could be a long way off that yet, but I doubt it. Already I am hearing of viable alternatives to both zinc and copper at current prices and it is indisputable that the froth has come out of the copper market. (whether it is a top or a consolidation remains to be seen)

The trick is how to react to these supply demand equations. It doesn't really affect me too much with my short/medium term swing/trend volatility style trading.

An overzealous conviction in a bull trend can be a good thing, but it can be a very bad thing. Those with deep pockets such as fund/instos are big enough and ugly enough to look after themselves. But at the NASDAQ bubble taught many people that there is a time bomb under every bubble waiting to blow up.

Already I know someone that leveraged themselves into the boom near the high earlier this year and blew up their life savings in the correction... nearly lost their house. I even warned him at the time (an exercise in futility )

The bears offer a necessary counterpoint of caution. I personally would not recommend anyone short commodities (unless for a swing trade with risk management in place etc etc) But I would try to make people aware of the nature and risks of commodity markets, particularly when overleveraged as newbs tend to do.

$0.02

 

[BSD]

An overzealous conviction in a bull trend can be a good thing, but it can be a very bad thing. Those with deep pockets such as fund/instos are big enough and ugly enough to look after themselves. But at the NASDAQ bubble taught many people that there is a time bomb under every bubble waiting to blow up.

Already I know someone that leveraged themselves into the boom near the high earlier this year and blew up their life savings in the correction... nearly lost their house. I even warned him at the time

The bears offer a necessary counterpoint of caution. I personally would not recommend anyone short commodities (unless for a swing trade with risk management in place etc etc) But I would try to make people aware of the nature and risks of commodity markets, particularly when overleveraged as newbs tend to do.

$0.02

A very valuable $0.02 too

Risk management is a place we are on the same sheet.

_____________________________________________________________

I do not think commodities will continue to move up in a steady line - just maintain stunning prices that continue to amaze; despite short term noise.

I certainly dont use $4 Cu (let alone $3) in my models - as much as I dont use $1.20 as a long term number.

But I maintain we have never had a China before - it makes the industrialisation of Japan look minor.

 

[rederob]

BSD,

Are we anywhere close to that? Buggered if I know, we could be a long way off that yet, but I doubt it. Already I am hearing of viable alternatives to both zinc and copper at current prices and it is indisputable that the froth has come out of the copper market. (whether it is a top or a consolidation remains to be seen)

The bears offer a necessary counterpoint of caution. I personally would not recommend anyone short commodities (unless for a swing trade with risk management in place etc etc) But I would try to make people aware of the nature and risks of commodity markets, particularly when overleveraged as newbs tend to do.

$0.02

Wayne
Although the future elusive, an interesting aspect of the "substitution" argument for the likes of copper etc is that the prices of substitutes have increased as substitution increased: In other words, demand for substitutes has pushed up their prices! The cost advantages of substitution are therefore short term, and the quality of the original metal product reverts. This was well shown with nickel and chrome in Chinese manufacturing production, where ultimately quality arguments won the day. And we know where nickel prices have gone this year.

Your point on copper is moot. Currently there is only one reason that copper prices remain subdued - the US housing market has slumped. we all know these slumps are temporary. Moreover, whether or not the US likes it, it remains THE preferred destination of most emigrants, so the cycle will swing back soon enough.
More importantly, if the "destocking" consensus is correct, China will have reduced demand to the point that copper prices have become acceptable to them again. Should this be the case, then we will have seen a substantial consolidation phase that is ready to turn into a new-born bull market. If i were a betting person, my money would be stacked heavily on the latter prospect.

I have no sympathy for newbies or others that chase a quick buck, and do not understand the risks of derivatives, or other leveraged products: They can equally burn themselves on the banks as commodities, although present risk suggests commodities will expose one to the third degree.

Reversion to the mean will occur, at some point, and this actually means prices will fall below that number, whatever it is, at the time. My strong present view is that we will have ample warning to quit the commodity bull before being trampled by it. That said, whatever indicators one wants to use, the present cycle is moving firmly ahead (overall).

 

[clowboy]

BSD,

I am a strong advocate of minimum prices in commodities. I.E when Ivory Coast Cocoa farmers started burning there crop in the streets in protest at prices, you can be pretty sure that that is pretty much the bottom.

Miners will close their mines, grain farmers will run sheep instead.. whatever. In other words when commodities become too cheap for producers to turn a profit, they'll cease production or do something else.

Basic stuff here. But I don't think anyone could disagree with this premise, therefore, we are all subscribers to the "minimum value theory", whether overtly aware of it or not.

Surely then, by default, we would have to recognise that there must be a maximum value for commodities. This is the point where producers increase supply and/or end users will try to find an economic alternative.

Where this is I do not know, but the signs will reveal themselves at the time it happens.

The commodities charts are littered with evidence of the above.

The thing is, the Chinese gu'mint being proactive as you say, I doubt will stand for perpetually increasing commodities prices. Maximum value will be reached at some point and the whole bull argument comes to an abrupt end.

Are we anywhere close to that? Buggered if I know, we could be a long way off that yet, but I doubt it. Already I am hearing of viable alternatives to both zinc and copper at current prices and it is indisputable that the froth has come out of the copper market. (whether it is a top or a consolidation remains to be seen)

The trick is how to react to these supply demand equations. It doesn't really affect me too much with my short/medium term swing/trend volatility style trading.

An overzealous conviction in a bull trend can be a good thing, but it can be a very bad thing. Those with deep pockets such as fund/instos are big enough and ugly enough to look after themselves. But at the NASDAQ bubble taught many people that there is a time bomb under every bubble waiting to blow up.

Already I know someone that leveraged themselves into the boom near the high earlier this year and blew up their life savings in the correction... nearly lost their house. I even warned him at the time (an exercise in futility )

The bears offer a necessary counterpoint of caution. I personally would not recommend anyone short commodities (unless for a swing trade with risk management in place etc etc) But I would try to make people aware of the nature and risks of commodity markets, particularly when overleveraged as newbs tend to do.

$0.02

WayneL

Excellent post

I would dispute that anything has a absolute bottom (besides 0) or a maximum top but agree fully that farmers burning crops is an indication that a bottom is reached, now if only when a top is reached there was some kind of smoke signal

Once again, great post.

 

[nizar]

now if only when a top is reached there was some kind of smoke signal

There is.
When the masses are buying.

 

[specman]

BSD,

Already I am hearing of viable alternatives to both zinc and copper at current prices and it is indisputable that the froth has come out of the copper market.

$0.02

wayneL,I am under the impression after exhaustive research that there are no viable alternatives for zinc as far as galvanizing is concerned http://www.bbosch.cl/src1/?seccion_id=622193a5f4fc16e77923fb0b741349dc&unidad=8

If I am wrong,I certainly want to know about it as soon as possible.Can you elaborate on what the viable alternatives are?

 

[2020hindsight]

wayneL,I am under the impression after exhaustive research that there are no viable alternatives for zinc as far as galvanizing is concerned http://www.bbosch.cl/src1/?seccion_id=622193a5f4fc16e77923fb0b741349dc&unidad=8

If I am wrong,I certainly want to know about it as soon as possible.Can you elaborate on what the viable alternatives are?

Not so much an alternative to zinc as a lesser amount required with painting i.e. an alternative to galvanising:-

There are some very efficient paints that are labelled "zinc rich epoxies" - I guess 10 or 20% of the zinc is used compared to galvanising (bit of a guess). Many even outperform pure zinc for long term protection.

But hek, don't get me wrong- I'm still buying zinc stocks

 

[wayneL]

Spec,

Been trying to find the article where I read that... no luck so far, still looking.

 

[specman]

Not so much an alternative to zinc as a lesser amount required with painting i.e. an alternative to galvanising:-

There are some very efficient paints that are labelled "zinc rich epoxies" - I guess 10 or 20% of the zinc is used compared to galvanising (bit of a guess). Many even outperform pure zinc for long term protection.

But hek, don't get me wrong- I'm still buying zinc stocks

Yes,painting is an alternative but being viable is questionable.Painting is very labour intensive and does not offer the all round protection of zinc.http://www.asia.indgalv.com.au/indonesia/benefits.htm http://www.gaa.com.au/benefits_10rbgs.html

In any case,zinc is the product of choice by the steel companies and their manufacturing process is built around it.I have yet to read about steel companies considering alternatives.I believe some have added a surcharge to recover the cost of higher zinc prices.

 

[ducati916]

BSD

I'll quickly restate the principals that will limit price appreciation;

*The Law of Diminishing Returns
*The US is a far larger market in % terms than China et al, and the US GDP has been slowing, this accounts additionally for the fall in oil prices.
Will the US head into recession? Who knows, but, while GDP growth falls, so will the prices commodities. Further, European growth is again falling, with Germany in particular being anaemic.
*The high price, reduces demand, and increases supply, thus, reversion to the mean becomes a very powerful statistical tool.

Returning to some of your points raised in counter-argument.

US GDP is greater than China's - but their effect on the copper market is not.

That is the equivalent of saying, an Institutional buyer of stocks [Mutual Fund] has less effect on stock prices than a retail buyer of stocks.
I have exaggerated the difference to illustrate the point.
A larger economy, will always have a greater effect on prices than a smaller one.

China have a centralised State that operate directly in the market to create outcomes for their industry. The Chinese government jawbone and participate directly in the market, the US government do not. The Yanks dont have a copper stockpile.

Yes the Chinese have an economy that is controlled in part [greater, or lesser] by the government. You are incorrect in stating that the US government does not intervene in markets, as obviously tarriffs are one simple example.

However, you are referring in a general sense to price floors and price ceilings.
Again, your statement regarding the US is incorrect. [US agriculture]

Taking price floors as our first example.
Price floors have the effect of creating surpluses, as the price is higher than the equilibrium clearing price.

Price ceilings on the other hand create shortages.

Steel is an excellent example of the Chinese government failing in the market intervention strategy. China was a net importer of steel up until some 18mths/2yrs ago. Heavily subsidised, the steel industry is inefficient, and produces at a net loss. China is now a net exporter of steel, but, at a loss.
This is an example of a price floor.

US industrial production is not growing at 10%+ per annum.

No, it is not.
I therefore invoke the Law of Diminishing Returns.
We have already seen one example in Steel.

US demand is steady - their demand for copper is not the swing factor. The copper intensity per capita is not growing in the US - it is growing at an exponential rate in China.

Nonsense.
The plotting of a basic supply & demand curve invalidates such a shallow analysis. Add in the complexities of elasticities to both curves based on non-linearity and the fundamental error of your premise can be illustrated.
It is at the margins, we as traders/investors try to operate, thus we are very exposed to the risks inherent at the margins.

In supporting my 'predictions' (essential if one is to have a view) some of the following points from a dealer note from the last couple of days have been important.

They make some decent points that you should account-for when getting worried about the effect of a US slowdown compared to the effect of Chindia in the medium to long term on global markets

By 2020 almost 400 million people in China and India will move to cities. A multiple of the entire US population
China and India will represent 37% of the entire world population and they will be growing wealth at a faster rate than the US population
Chindia GDP will be double the Japanese economy and 60% of the US economy
Chindia will represent 30-50% of global commodity demand

Interesting.
Let me address your [dealers] points;

On, or around October 17 2006, the US population hit 300 million.
This is an increase of 100 million from 1967
At this growth rate, the US population will hit 400 million circa 2047

How calculated?
Through fertility rates;
US = 2.1
Spain = 1.28
EU = 1.47
Hong Kong = 0.98
China = 1.7

I am of the view we are three years into a 20 year cycle being fuelled by demand from China.

Based on the replacement rate, the population of China will reduce by almost half [50%] over the next 42yrs.

Immigration, is an alternative to *growing* your population, so, what are the figures for immigration into China?
Unsurprisingly, they are so low as to be almost insignificant.
The US has a number of migration issues, and very long waiting lists for legal immigration.

Therefore, contrary to the general opinion, the numbers do not support currently the premise put forward by your dealer.

The hedge funds can leverage-up all they like, they cannot take on the Chinese government.

This type of generalised statement, that makes a sweeping claim, without any substance can be dismissed. However, there is a strong case to be made in regards to the *speculators* currently operating in the commodity markets that can be made in a follow on post.

jog on
d998

 

[rederob]

ducati
Of the people that post on this site, you take the cake for misconstruction and distortion.
The very simple reality is that China continues to have a predominant effect on the price of many hard and soft commoditities.
Distort that reality as much as you like, but don't expect reality to change.
Your use of arcane economic jargon and its application to to unfolding market events, particualry your comments about copper, reflect a significant lack of understanding of recent market fundamentals.
Please keep posting, however, as I get great joy from your creative elaboration of misrepresentations and untruths.

BSD
I have subscribed to much that you post on for many years now.
Wayne rightly points out that a contrary view is useful.
But so too is following a clearly defined long term trend that has barely faltered.

 

[BSD]

Duc

I will address some more of your comments later.


But would like to note the growth figures (400m people) are not based on population growth they are based on numbers forecast to move to cities to join the developed world.

People who will move from a subsistance lifestyle to buying a TV and Air Conditioner for an apartment.

20 million per annum have been making the shift in China alone, in recent years. Increasing their copper consumption at multiple of before.


Here is an interesting article that goes a little way to backing some of my claims concerning investors being short and consumers being long, as well as the broad US based disbelief in the cycle and the removal of the backwardisation in the copper market

http://www.investor.reuters.com/Art...&src=112106_1406_INVESTING_comment_n_analysis

Have a great day

 

[ducati916]

rederob

ducati
Of the people that post on this site, you take the cake for misconstruction and distortion.
The very simple reality is that China continues to have a predominant effect on the price of many hard and soft commoditities.
Distort that reality as much as you like, but don't expect reality to change.
Your use of arcane economic jargon and its application to to unfolding market events, particualry your comments about copper, reflect a significant lack of understanding of recent market fundamentals.
Please keep posting, however, as I get great joy from your creative elaboration of misrepresentations and untruths.

The economic theory that I relate, is hardly obscure, I am only utilizing basic supply/demand theory & introducing the Law of Diminishing Returns, which explains the rationale for falling prices.

That you posts contain a vacuum of information, but a plethora of opinion somehow suggests a verisimilitude to the topic under discussion; however, we have been down this road before with your bullish stance on gold.

Originally Posted by rederob
Not asking you to buy gold as I am happy to do that.
But would you like to do another of your detailed analysis so that we can see what range prices for gold we can look forward to over the next year or so?

Or would you prefer a brief history lesson: Recall my challenge to you -


And one of your multitude of sweeping conclusions:

In the light of the fact that gold has breached your preferred upper range of $720 I think it only fair to give you another opportunity to prove yourself. On the other hand, I will concede utter defeat if gold’s “parabola” collapses and by year’s end POG is trading under $800 (which I believe is generous in that my expectation was for gold to be near that level by year’s end, rather than be as “support”).

For the moment, I am hoping for another $50 or greater retrace in gold near term, but will not hold my breath: Corrections in the metals complex as a whole are running to about 3 days instead of 3 weeks or more.

Wayne
I will put you into ducati’s camp. Do you recall an earlier post where you mooted a $500 correction and I replied:

My concluding remark for now is that playing the markets means taking a forward view, and that view can be based on your decision to trade a safe “yield” equity, or a highly speculative futures contract. You enter the trade with a “view”, never a “knowledge”. Posting that “view” can mean a loss or gain of “reputation”, but in the case of ducati, he has my respect for at least trying to work out gold: A little knowledge can be a dangerous thing.

So forgive me that I shall just dismiss your opinion, as just so much nonsense.

jog on
d998