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>>>>> December 22, 2013

That Was The Week That Was ... In Australia
>>>>> By Our Man in Oz

Minews. Good morning Australia, your market seems to have enjoyed strong support in the last full trading-week of the year.

Oz. It looks that way, but the uplift was restricted to the last two days rather than the full week with early falls wiped out by a hectic return of buyers on Thursday and even more so on Friday.

The net result was a 3.1 per cent rise by the all ordinaries index, a 3.7 per cent rise by the metals and mining index and even a 1.4 per cent rise by the gold index despite the sharp fall in the price of gold.

Minews. Presumably an even better trend can be expected in the very short trading windows coming up with Christmas and New Year’s day bisecting each of the next two weeks.

Oz. That seems likely to be the case after the latest U.S. economic growth figures confirmed the strong recovery underway in the world’s biggest economy, and that the pace of central bank money printing will slow in the New Year.

A whiff of the pace of the recovery underway in the U.S. came with the release of third quarter growth figures showing that the economy grew at an annualised 4.1 per cent which was reflected in a Friday rally in the price of industrial metals.

Gold also staged a modest recovery after falling below US$1200 an ounce early in the week and while that came after we had closed on Friday the local gold sector was surprisingly strong.

Minews. Let’s move quickly across to prices as everyone is busy in the week before Christmas, starting with any newsworthy moves.

Oz. There were a few, though not as many as in previous weeks, and with the usual mix of good and bad news. The three which stood out were:

Sandfire (SFR) stepped up its efforts to consolidated copper exploration targets around its Doolgunna mine in Western Australia by striking a deal with its neighbour, Talisman (TLM). The tie-up saw Sandfire add A48 cents to A$6.40 and Talisman rise by A4.6 cents to A14 cents.

Newcrest Mining (NCM), the biggest local goldminer, added A28 cents to A$7.70 but did move between a low of A$6.99 and a high of A$7.87 in very heavy trade on Friday when more than 20 million shares valued at A$170 million were exchanged, perhaps an indication that a deal is brewing.

Discovery Metals (DML) was heavily sold off after a planned capital raising was cancelled with the net result being a A1.7 cent (30 per cent ) fall to A3.9 cents. At one stage on Friday it touched a 12-month low of A3.5 cents, which is a long way down from the 12-month high of A$1.65.

Minews. Time to move through the sectors, starting with gold because it seems your market did better than might have been expected.

Oz. It did, and a reason could be that the Australian dollar continues to weaken, dropping below US89 cents at one stage, but closing the week a fraction higher.

Minews. You’re saying that gold stocks are being treated as a currency hedge.

Oz. It’s possible, though an outright bullion investment would make more sense.

On the market, after Newcrest, rises and falls were evenly matched with some of the better rises including: Orbis (OBS), up A7 cents to A32 cents. PMI (PVM), up A8 cents to A36 cents thanks to a takeover deal with Asanko Gold. Medusa (MML), up A5 cents to A$1.89. Regis (RRL), up A10 cents to A$3. Gryphon (GRY), up A1.5 cents to A16 cents, and Sumatra (SUM), up A1.4 cents to A8.4 cents.

Gold stocks to lose ground included: Papillon (PIR), down A9.5 cents to A90 cents. Endeavour (EVR), down A6.5 cents to A52.5 cents. Kingsgate (KCN), down A7.5 cents to A92 cents. Beadell (BDR), down A1.5 cents to A73.5 cents. Doray (DRM), down A7 cents to A52.5 cents, and OceanaGold (OGC), down A4 cents to A$1.57.
...

Source >>>>> www.minesite.com
 
Happy New Year and have a wonderful 2014!

As I said before both commodity and stock market are not dead. At different times some commodity and commodity stocks will outperform others. I am bullish on zinc, meat, pepper, tea and few more commodities. I am slightly bullish on copper as well.

The EU-28 boiler sector is expected to grow in 2014. Domestic demand is slowly increasing. The significant decrease of grain prices in the EU-28 since the spring of 2013 will increase operating margins. It is same in the USA. Globally grain elevators and poultry producers could increase their profit margin in 2014.

http://www.fool.com/investing/gener...is-looking-healthy-for-2014.aspx#.UsO9yPQW2WY

The Chicken Menu Is Looking Healthy for 2014

http://tribune.com.pk/story/652358/essential-eatables-prices-of-eggs-chicken-shoot-up/

Essential eatables: Prices of eggs, chicken shoot up

http://www.thepoultrysite.com/poultrynews/31036/scottish-government-launches-poultry-plan

Scottish Government Launches Poultry Plan

http://www.wattagnet.com/Poultry_is_Mississippi_s_top_commodity_for_19th_straight_year.html

Poultry is Mississippi's top commodity for 19th straight year
Mississippi poultry valued at $2.7 billion, say Mississippi State University experts

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions. Please note that I do not endorse or take responsibility for material in the above hyper-linked sites.
 
Copper and Zinc my picks in the base metals sector.

Supply increase in Cu has not eventuated and Zinc mines are in decline due for shutdown..
 
I believe it is time to identify emerging commodities. For example it is expected that zinc market could turn the metal into one of the best performers in the coming years due to looming supply shortage. What about poultry and beef? It is expected as a commodity and food both poultry and beef market to do well in the coming decade. Of course it is going to be wonderful year for chicken and beef in 2014. Please see following link that not only emerging world such as China and India but also Americans are going to eat more chicken in the coming years.

It could be different ball game in the coming decade. It is expected that USD could become bull currency in 2014 and 2015. It will be the game changer in many ways. I am one of the big bulls for USD and one of the big bears for both AUD and NZD. No commodity will stay high or low for ever. During last couple of years when global economy was not doing well all type of market players were desperate to park their money somewhere. So they parked some of their money in NZD and AUD as well. In the commodity world all types of metals and grain also got boost from these types of money. As I said now it is going to be different ball game. It is expected that some sectors are going to benefit lot in the coming years.

http://resourceinvestingnews.com/64886-zinc-outlook-mine-closures-may-push-prices-up-in-2014.html

Zinc Outlook: Mine Closures May Push Prices Up in 2014
Monday December 30, 2013, 4:30am PST

http://www.huffingtonpost.com/2014/01/02/chicken-vs-beef_n_4525366.html#!
Chicken More Popular Than Beef In U.S. For First Time In 100 Years

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions. Please note that I do not endorse or take responsibility for material in the above hyper-linked sites.
 
>>>>> 6 January 2014

Byron Wien's 10 Market Surprises for 2014
>>>>> By Byron Wien

Among the strategist's predictions: strong economic growth turns Fed tapering into a nonevent.


Editor's Note: This is the 29th year that investment strategist Byron Wien has given his views on a number of economic, financial market and political surprises for the coming year. Wien is currently a senior advisor with Blackstone, the private-equity and asset-management firm.

Here are a list of surprises for the coming year. A "surprise" as an event which the average investor would only assign a one out of three chance of taking place but which I believes is "probable," having a better than 50% likelihood of happening.

1. We experience a Dickensian market with the best of times and the worst of times. The worst comes first as geopolitical problems coupled with euphoric extremes lead to a sharp correction of more than 10%. The best then follows with a move to new highs as the Standard & Poor's 500 approaches a 20% total return by year end.

2. The U.S. economy finally breaks out of its doldrums. Growth exceeds 3% and the unemployment rate moves toward 6%. Fed tapering proves to be a nonevent.

3. The strength of the U.S. economy relative to Europe and Japan allows the dollar to strengthen. It trades below $1.25 against the euro and buys 120 yen.

4. Shinzo Abe is the only world leader who understands that Dick Cheney was right when he said that deficits don't matter. He continues his aggressive fiscal and monetary expansion and the Nikkei 225 rises to 18,000 early in the year, but the increase in the sales tax, the aging population and declining work force finally begin to take their toll and the market suffers a sharp (20%) correction in the second half.

5. China's Third Plenum policies to rebalance the economy toward the consumer and away from a dependence on investment spending slow the growth rate to 6% in 2014. Chinese mainland traded equities have another disappointing year. The new leaders emphasize that their program is best for the country in the long run.

6. Emerging market investing continues to prove treacherous. Strong leadership and growth policies in Mexico and South Korea result in significant appreciation in their equities, but other emerging markets fail to follow their performance.

7. In spite of increased U.S. production the price of West Texas Intermediate crude exceeds $110. Demand from developing economies continues to outweigh conservation and reduced consumption in the developed world.

8. The rising standard of living and the shift to more consumer-oriented economies in the emerging markets result in a reversal of the decline in agricultural commodity prices. Corn goes to $5.25 a bushel, wheat to $7.50 and soybeans to $16.00.

9. The strength in the U.S. economy coupled with somewhat higher inflation causes the yield on the 10-year U.S. Treasury to rise to 4%. Short-term rates stay near zero, but the increase in intermediate-term yields has a negative impact on housing and a positive effect on the dollar.

10. The Affordable Care Act has a remarkable turnaround. The computer access problems are significantly diminished and younger people begin signing up. Obama's approval rating rises and in the November elections the Democrats not only retain control of the Senate but even gain seats in the House.

Every year there are always a few Surprises that do not make the Ten either because I do not think they are as relevant as those on the basic list or I am not comfortable with the idea that they are "probable."

Also rans:

1. Through a combination of intelligence, extremism, celebrity and cunning, Ted Cruz emerges as the clear front runner for the 2016 Republican presidential nomination. Chris Christie and the moderates fade in popularity as momentum builds for fiscal and social conservative policies.

2. In two and a half years the price of a bitcoin has increased from $25 to $975. The supply of bitcoins is fixed at 21 million with 11.5 million in circulation. Bitcoins lack gold's position as a store of value over time. During the year bitcoin's acceptance collapses as investors realize that it cannot be used as collateral in financial transactions and its principal utility is for illegal business dealings where anonymity is important.

3. Overcoming objections from the Cuban exile community, President Obama opens discussions on initiating trade and diplomatic relations with Cuba. A reduction in sanctions is proposed, as well as limited financial support in the form of bonds, quickly dubbed as "Castro convertibles."

4. Hillary Clinton decides not to run for President in 2016. She says her work with various Clinton not-for-profit initiatives is important and unfinished. Specifically, she explains that her health was not an issue in her decision. The Democratic race for the top seat becomes chaotic.

Source >>>>> Barron's (USA)
 
Gold And Silver Sell Off, Sitting Near Session Lows
07-Jan-14 10:35 ET(NY time)

Commodities are higher today overall, but metals are almost all lower
Gold, silver, copper, iron ore and platinum futures are all in the red. Palladium futures are higher this morning
The energy sector is strong with gains in both WTI crude oil and brent crude oil, gains in natural gas, heating oil and RBOB gasoline futures
Gold and silver futures sold off shortly after pit trading opened and are now near session lows

Source >> briefing.com
*****
 
04 Jan 2014

That Was The Week That Was ... In Australia
by Robert Tyerman

...

Minews. Enough from the opening week, time now for a few observations from you about the year ahead.

Oz. In a word, better, though for the less-than-thrilling reason that 2014 couldn’t be much worse than 2013.

Last week’s mini gold rush on the ASX was a sign that investors are keen to re-enter the small end of the market in the context of a combination of factors that include global economic growth led by the U.S. recovery and China ploughing ahead at its regulation 7.5 per cent expansion rate.

There are also indications that mineral stockpiles are declining, while the continued slide in the value of Australian dollar will aid exporters selling in U.S. dollars.

Another reason for investors to take a fresh look at the tail-end of ASX is that 2014 will be a year of intense merger and acquisition (M&A) activity, for multiple reasons.

The most obvious M&A driver is that there are too many asset-rich, cash-poor, stocks on the market. Another is that micro-stocks must get bigger to attract the eye of investors.

Minews. Where’s the best place to start looking for value-creating activity?

Oz. Gold stocks. If the price of the metal holds its current price or rises just a little further, we should see a continuation of the recovery bounce which dominated trade last week. And that in turn could act as the trigger for an acceleration of M&A activity among gold stocks of all sizes.

Zinc, after a year of false starts, should finally start to attract serious interest with the big mine closures that have been well-flagged over the past few years.

The sharp upward move by Triausmin late last week was a fresh reminder that big things are expected from zinc stocks at some time in the future simply because of the promising supply-and-demand outlook.

Copper stocks should also have a better year thanks to the continued fall in the global stockpile and signs of rising demand as the U.S. economic recovery gathers pace.

Last week’s rise in the copper price to its highest level in seven months was a reminder of what might happen as demand in major copper-consuming countries accelerates and supply remains steady, or falls.

Minews. Are there any problem areas ahead?

Oz. Iron ore, aluminium and uranium remain the great uncertainties, for the reverse of the explanation, excess supply overpowering damp demand.

Iron ore has been the surprise performer of the past 12 months with the price sticking above the US$130-a-tonne market, a level which could become harder to maintain if Chinese steel demand slows and iron ore production continues to expand.

Uranium stocks continue to suffer from a price for the metal which is well below break-even for most projects, including the ASX sector leader, Paladin (PDN), which probably has six-months to get its financial affairs sorted before another crisis.

Aluminium is in a hopeless position as too many countries churn the metal out almost as a by-product of power production.

Minews. Thanks Oz. It looks like 2014 will be another interesting year.

Source >>>>> www.minesite.com
 
06 Jan 2014

The Minesite Commodities Outlook For 2014
>>>>> by Rob Davies <<<<<

Lord Weinstock, the legendary CEO of the General Electric Company, commenting on the projections for the year ahead, used to remind his audience that on day one the coffers are totally empty.

Everything to be earned that year has to be created from nothing even if the necessary infrastructure is in place.

So it is with any analysis of what lies ahead for commodities in 2014.

Nothing happens on its own. Metal has to be mined to be satisfy fresh demand from consumers.

But just because they bought a car last year does not mean they will buy another this year.

Fortunately it seems consumers are becoming more confident and are likely to increase spending in 2014.

The latest forecast from the IMF is for global economic growth in 2014 to average 3.6 per cent, which is substantially higher than the estimated expansion of 2.9 per cent in 2013.

Although the numbers used by The Conference Board are slightly lower - 2.8 per cent in 2013 rising to 3.1 per cent in 2014, the rising trend is the same.

Given that between one third and two thirds of metal demand is satisfied by recycled material it suggests that the mining industry can anticipate its market expanding by one to two per cent.

Not fantastic, but not bad in a generally sluggish world still overburdened with debt.

As with all data, these numbers need to be treated with a degree of caution. A small economy growing fast is not as important for consumption as a large economy growing slowly.

Here, metals are once again in the sweet spot because just under half of world growth now comes from emerging and developing economies, which includes China.

This group is forecast to expand at 4.6 per cent in 2014, a tad lower than the 4.7 per cent estimated for last year.

Even so, it is a lot faster than the 1.7 per cent projected for the mature economies, and that in turn is much higher than the predicted expansion of one per cent in 2013.

So while there may be much talk of the developed world picking up the baton of growth in 2014 relative to the developing world, the reality is that the action is still with emerging economies.

Moreover, not only are the emerging economies growing faster, but they also use more metal and recycle less scrap, as they have a smaller, and newer, stock of goods.

So even though it is popular to downplay the commodity sector, metals in particular have a lot going for them in terms of end markets.

Moreover, the industry has already drastically cut back its expansion plans so there will be a reduction in the amount of new material being supplied to the market.

Whether the industry has got that balance right will be the key determinant to how metal prices evolve over the year.

One metal where the market has already passed judgement is aluminium. It starts the year at US$1,802 a tonne but the forecast average price for 2014 has declined sharply from the US$2,550 predicted back in 2011 to the current consensus forecast of US$2,045 recorded by Bloomberg.

Much of this is due to the overcapacity arising from new plants in China and the Middle East. Given that Chinese demand is predicted to increase by 10 per cent in 2014 this enthusiasm is understandable.

Société Générale predicts world demand for aluminium will increase to 53 million tonnes in 2014 with 26 million tonnes of that coming from China.

The problem is that China is also forecast to produce 27 million tonnes, thereby creating a surplus. On projected growth figures the long term outlook for aluminium looks good, but unless capacity is closed the short term does not appear favourable.

Copper has a much better fundamental structure than aluminium. Nevertheless, 2014 price forecasts have followed the same downward trend. The consensus for the year now stands at US$6,945 a tonne having been as high as US$7,800 a year ago.

At 21.7 million tonnes, this market is half the size of aluminium but is growing at 4.8 per cent a year.

Experts at Société Générale are fearful that the big expansion of mine capacity over the last decade will now start to overwhelm even this impressive level of growth and lead to rising inventories and weaker prices.

That said the metal starts the year with LME inventories of just 365,700 tonnes and prices at US$7,421 a tonne.

To achieve the consensus average for the year reported by Bloomberg implies prices falling to near US$6,000. If that happened Société Générale estimate that nearly 10 per cent of capacity, roughly 1.5 million tonnes, would be losing money.

That suggests that price level is a pretty strong floor, and it is hard to see prices going as low as that for any length of time.

Nickel starts the year at an already depressed price of US$13,975 a tonne, yet Société Générale forecasts an average price for 2014 of US$15,000 a tonne while ABN Amro thinks it will be US$15,500.

If either estimate is anywhere near the mark it implies that prices should rally sharply by about US$2,000 or maybe US$3,000 over the course of the year.

That view is supported by the analysis from the French bank that about 50 per cent of production is currently unprofitable. Whether producers react by cutting production to reduce the surplus will be the key feature in the evolution of prices this year.

Société Générale makes no apologies for anointing zinc as its favourite metal. However, it could be argued that the current level of US$2,081 a tonne already discounts this favourable position. Indeed, the forecast average of US$2,040 from the French bank suggests that there is not much more to go for.

Iron ore remains by far and away the most important hard commodity for the mining companies. Fortunately Société Générale does not expect any major change in this market over the next few years, even though it will move from being in deficit to being in surplus.

It argues that the projected surplus in 2015 will only be 0.3 per cent of global demand and will not be material. It therefore only expects a modest decline in average prices to US$110 a tonne (61% FOB Australia) from US$116 last year.

Prices of metals and mining shares already reflect the consensus view of the experts. If prices move it will be because the consensus changes, either on fresh data or revised opinions.

All that can be said with any certainty is that metals are now mostly trading at close to marginal costs of production and that there is precious little hype in mining equity valuations. That should be a good base to work from, at least in theory.

Source >>>>> www.minesite.com
 
11 Jan 2014

That Was The Week That Was ... In Australia
by Our Man in Oz


Minews. Good morning Australia. Your red-hot iron ore stocks appear to have been buffeted by headwinds last week.

Oz. There was a weaker tone in the iron ore sector, though it was a change we had been expecting for the past six months.

Minews. Presumably, that view was based on the principle that everything which goes up must come down.

Oz. It’s not a very scientific approach, but iron ore has been a terrific performer for much longer than most investors expected, so when the price dropped a few dollars last week there was a definite move towards the exits.

On the other hand, the money flowing out of iron ore seems to be testing the heavily-sold gold sector and while we didn’t see much of an upward move in gold stocks last week we might do next week because the gold price moved up quite sharply after we closed on Friday.

When Australian investors were heading for the pub on Friday the gold price was US$1,234 an ounce. We they woke on Saturday morning it was up to US$1,249 per ounce, and looking stronger, following those weaker-than-expected U.S. employment numbers.
...

Source >>> www.minesite.com
 
13 Jan 2014

Which Is To Be Feared More - Inflation Or Deflation?
>>>>> by Rob Davies <<<<<


The asset allocation experts at Société Générale summed up the prospects for the year ahead in a presentation last week.

When asked whether they feared deflation more than inflation, they answered: both, first deflation then inflation.

As if to drive the point home, the below consensus rise in US payrolls of 74,000 in December caused fresh concerns that the recovery in the US economy is still anaemic.

The consensus was for an increase of 197,000 but the coldest December since 2009 and 21 per cent more snow than normal caused a significant miss.

But it wasn’t only the weather.

Others pointed to the still massive overhang of debt that is keeping interest rates low in the US and pretty much everywhere else, and the residual fear that the economy remains fragile.

That was why bonds went up and equities went down in the first full week of trading in 2014.

Base metals enjoyed a relatively good week and moved higher as a group to give a closing LME Index level of 3,124.

A major component of that increase came from nickel.

It rose 2.3 per cent to US$13,430 a tonne on fears that Indonesia will actually carry out its threat to ban the exports of raw materials in a bid to increase the amount of processing done in the country.

Nickel, much of it exported as high grade lateritic ore for Chine nickel pig iron plants, is seen as particularly vulnerable. The threat of the ban, due to come in on the 12th of January was reinforced when Indonesia prevented ten Chinese ships leaving the country last week.

Other news from China was more positive.

In 2013 Chinese iron ore imports increased 10 per cent to 820 million tonnes, copper imports increased 29 per cent and the country imported 330 million tonnes of coal.

The big fear that the commodity sector is vulnerable to a Chinese slow-down was not realised last year and there is no evidence in the data that it is about to happen this year either.

Bears argue that growth in China is slowing down. Even if it is as “low” as seven per cent it still knocks spots of anything in the West.

Indeed, the soothsayers at Société Générale make the point that the recovery in the US, weak as it is, is now five years old which is quite venerable as these things go.

Their concern is that as the market accepts the reality that what growth there is can only be maintained by prodigious volumes of newly printed cash, worries about deflation will resurface.

The argument is that the debt overload will not be reduced by economic growth or austerity and that the only way it can be resolved is by a formal default - or an informal default through inflation.

Either mechanism is good for commodities as investors seek real assets.

Perhaps the ”discovery” that China holds more than two and half times more gold in its reserves than was previously thought suggests that it has already taken pre-emptive action.

Even if the recovery in the West is mature and starts to slow, it is not doing so from elevated levels so, other than bonds, asset prices are not generally overvalued, despite what the French bank thinks.

More likely is that the efforts to stimulate growth will start to work, via inflation, and reduce the real value of outstanding debt. That encourages consumption and hence metal demand.

Source >>>>> www.minesite.com
*****
 

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