Why metals will remain strong for a long time in my opinion.
There is no way to look at mining stocks without having a good understanding of the state of the world economically.
I have maintained for many years as has 1Vpro, Jimmy Rogers and others that we have a true second industrial revolution on our hands. A paradigm shift and resources can rise a lot becasue of the new very cheap labor forces exporting deflation! So how will this event manifest itself.
China now imports more copper and zinc than the US.
My thesis is this: as China, India and the rest of the "3rd" world continue to improve their infrastructure they will consume more, not less metals. After the house and the electricity come the appliances!
China will consume huge amounts of copper and zinc over the next 3 years finishing their 3 gorge dam (15 to 18 nuclear power plants of electricity)and getting ready for the olympics. In the meantime India is building a freeway around the entire country to facilitate commerce. The rest of the 3rd world is also building. That is about 4 billion people (2/3rds earth population) consuming where before they were just barely surviving (and not surviving).
And India is predicted to surpass china in next 10 years in GDP! China is forth now behind the US, Japan, and Germany.
And the US will have to keep the dollar spikets open to accomodate the huge spending to come on the baby boomers medicare and social security (in addition to bush's huge tax cuts to the rich and huge military spending) and prevent deflation so we can service our huge debts. So the money will be there for the 3rd world to keep building.
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On the supply side, environmentalists (my people-lol) overdoing their zealous oversight of the envirnmont, not wanting clean mines,, but wanting NO mines at all! I am a real lefty so I know what my people are doing-lol. As they get in their car, drive to their home, flush the tolit, do a load of wash, watch tv and get on their computer-lol.
They think these metals grow in Kansas-lol.
Anyway demand should remain very strong and actually grow stronger as infrastructures are built around the world with very new money from the 3rd world and oil producing countries, most of which need huge infrastructure buidling. Like Russia, Ukraine, Nigeria and the entire middle east; and supply should remain anemic as it will take so long to bring new supplies on line.
So the US debts and M3 money supply ensures liquidity for the consumer which goes to the 3rd world, so 3rd world can keep building, but as the infrastructure grows so does the consumption of metals (exponentially I think); and supply will remain muted.
Silver is in a class by itself as it is way undervalued and first has to obtain a price relative to say zinc and copper in todays market. Which should be over 20 dollars in my book.
And to the dave. 1980 went straight up to $850 gold and $52 dollar silver. Despite the HUnt brothers, that is a 16 to 1 ratio of gold to silver and 16 to 1 is the historical ratio of gold to silver price.
PS I think $500 i sthe new floor for gold and one has to include base metals mining stock sin their protfolio. |
