start here

start here

The Daily IKN email digest, get all daily posts sent to you next day (& no ads)

I say things on Twitter

8/4/08

Metals smackdown


Copper at 3.52 is still inside my 2008 range (which has held pretty well, gotta be said). We're fed that it's "seasonal slow demand" which stands up to analysis for about a millisecond, as if it is seasonal everyone should have seen it coming, no? Therefore why the sudden 10c gap in spot prices? So if this move made you nervous don't expect any sympathy from me. Chase the market at your own leisure....I'm just fine here.

Gold was whacked to $900 again but it could stay there. Quickly back at $907 and pointing the way out of la-la land and towards financial reality. Are you preserving your capital? If not, do it now. I know it's boring, unsexy and unfashionable in this now now now world, but ex-market investors being really poor and working as burger flippers may be part of the next fashion season. Wanna join 'em?

Zinc is in the process of confirming its bottom. There are too many players wise enough to see the supply problems at these low prices. Zinc's not going any lower. Zn exposed miners are extremely cheap right now, and my favourite buy basket. Risk/reward is strongly in favour of new longs.

Looking at the miners this morning, the general impression is that they've been sold into this metals drop but there's little volume and less sagging than last week. My bellweather PCU got heavily sold last week (miners leading metals?) and is off again today, but I smell no panic. Also, remember all that talk about RIO buying FCX? Well FCX is now around 15% cheaper than when those very strong rumours started, and RIO still has the money in its warchest. FCX at $87 is one to consider seriously from here, as even without M&A activity it is in bargain territory.

A quick word about JAG and its disappointing PR last week (here's the link). 2008 and 2009 production outlook is down due to start-up delays and one of the consequences is higher anticipated cash costs. It's all a bit of a bummer, really, and JAG has dropped back to $9.20 at time of writing this. The appeal of the company however, is the deep drilling campaign that promises to add significant ounces to its reserve holdings even as it produces, grows and earn money. The slowdown in growth projections is a pain, but the reasons why the company trades at a significant multiple over its peers have not suddenly disappeared. Once the short term bad news is digested by the sheeple market, JAG will bounce back just fine (just don't ask me for a timeline right now).

UPDATE:
Wowsers, spoke too soon on the panic angle. FCX is getting murdered now on big volumes, and PCU is down at $24, too. Days like these are why you should always keep some liquidity on hand in bear markets (talked on this one before).