Copper topper (Colandra comments)
[ME: copper price back over 89, after going below 88]
Copper, those who live in this space know by now, is the doctorate of metals. It is a diagnosis of the world's manufacturing health. After reaching 95 cents a pound, copper's price the past three days has slipped to below 90 cents.
Most of the financial wires said the decline came after indications more companies would boost output to meet demand from China and other copper gluttons. Indeed, everyone from Phelps Dodge to Placer Dome is revising feasibilities for new copper mines, now that the price is averaging more than 80 cents a pound for the first time in many years.
I got Jack Jones, the CIBC analyst in London, on the horn Friday morning, Jack, I said, what do you see in this little head-fake of a copper decline these past couple days?
Jones, whose work earlier this year identified promising copper miners at cheap stock prices, is still a copper head. "At the Rio Tinto presentation yesterday, management enthused over China's impact on copper and stated, 'We are perhaps about to enter a period of robust prices,' " Jones said.
Most of the veteran copper folks see the industrial metal breaking at least $1 a pound in the near future. Rio Tinto is probably the world's largest diversified mining company. Oscar Groeneveld, the head of Rio Tinto's copper unit, told the London gathering that demand for the metal could grow by 5 percent next year.
Jones also sees little impact from the metals and gems legislation that just got Russian President Vladimir Putin's signature this week. Russia will begin to release more data on its stores and production of platinum, palladium, diamonds and so on. Russia is the world's largest supplier of palladium and second-largest producer of diamonds and platinum.
Some of the nonbelievers in the metals equities rally see Russia's greater release of metals dope as a bad sign for the commodities markets. Their thinking is that with more information from those frisky Russians, outsiders will have more incentive to invest in new Russia mines -- and that will lead to even more supply.
I am of the belief that the legislation will give the Russians even more sway over their shadowy outlines of palladium and platinum supplies, and nickel, too.
Jones says more Russia metals disclosure will have almost no impact. Palladium -- in the dumps and below $200 an ounce -- "is weak on Russian stock-market worries," he says. Platinum, near a quarter-century high at $765 an ounce, "is strong on South Africa platinum project delays."
Precious metals show
Finally, this weekend and early next week, more copper/ gold/ silver/ platinum/ palladium/ diamond miners than you can shake a stick at will be in San Francisco at the season's final big-bang gathering of precious metals bankers and executives. The San Francisco Precious Metals Conference is open to the public.
I expect several companies, including Bema Gold (BGO: news, chart, profile) and its subsidiaries, to provide market updates that will justify their rapidly gaining market values. We'll see more than one Canadian company, such as Northern Orion (CA:NNO: news, chart, profile) and Nevsun Resources (CA:NSU: news, chart, profile), that are headed toward American stock-market listings.
Northern Orion, as forecast here by asset manager Frank Holmes, on Friday said its stake in Argentine copper and gold mine Bajo de la Alumbrera produced more than $11 million of operating cash flow in the recent quarter. "A few more quarters like that, and this is one of the cheapest mining stocks out there," said Holmes, whose U.S. Global Investors mutual funds down there in Texas owns a chunk of Northern Orion shares.
Come on by the San Francisco Precious Metals Conference. It's free for those who register. I'll be doing my "act," as Sprott Asset Management's John Embry described my over-the-top presentation from New Orleans a couple weeks ago. I'm on early Monday morning -- in a workshop for investors and a speech later in the A.M. I'll be presenting my two or three best bargain mining stocks, and maybe one technology investment as well. |
