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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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To: Claude Cormier who wrote (19115)8/25/2006 12:54:35 PM
From: TrueScouse  Read Replies (2) of 78410
 
CC:

Good discussion on the China situation, possible impact of a turndown in the US economy, etc.

My own position is that the Chinese economy will maintain its present growth for the next two years -- at least until the Olympics are over in summer 2008. I think the leadership of the communist party will really want to use this as a showcase to the world -- added to which there's a huge amount of construction going on just to get ready for the Games.

When you add in the massive domestic consumption of a growing Chinese middle class, I don't see things slowing down much. It's true that a recession in the US will soften prices, but the real engines of the world economy now are the BRIC countries -- especially at the margin of supply/demand. e.g., China has gone from being an exporter of zinc to a massive importer in only the last 2 years. And Coxe used to quote a figure which I always found amazing -- that you have to triple China's annual GDP growth rate to estimate the increase in base metals consumption. So, if the world's biggest copper consumer grows by 10%, copper consumption grows by 30%! In one year. Where's this going to come from, irrespective of what happens in the US? Even if Chinese growth slows to 5%, copper consumption will rise by 15%.

So, I'm firmly in the "it's different this time" camp -- although I know that the risks are very high.

Best regards,
Howy
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