Chinese Copper Demand
Within the last 2 weeks, I saw an article on the front page of the Wall Street Journal. The article was about surging economic growth in various provinces, in spite of attempts by the Chinese government to slow growth down. They gave an example of a village that is developing a Business Center. It will have the largest stretch of roof in Asia. Lots of copper under that roof.
The article also gave figures for economic growth in several provinces. The figures for August, (year over year comparisons) were around 20% in several provinces. Those are actual figures, and they far exceed the numbers we were hearing from the smart Wall Street guys.
For me, this drove home several points:
1) A lot of the stories about “growth slowing in China” are just flat out inaccurate. That may be the desire of the Central government, but making it happen is a different story. The article expressed specific doubts about the ability of the Central Chinese government to actually control economic events.
2) The article was also rather doubtful whether the government could ever control inflation, if it ever really got started. General inflation in China has been low so far, even with the growth sucking up raw materials.
3) Even if growth does slow down, what will be slowing down is the “ate of Growth”, not growth itself. For example, economic growth may slow from 15% to 8%. The commodity bears will all be yapping. But there will still be 8% growth. In a constrained market, that’s still a lot.
4) The HUI bottomed out in May 2005. I think almost half of the Newsletter guys, and Gold/Metals -Website guys were writing stuff along the lines of “It’s over”. “The great Gold/Commodities Bull Market is over”.
The HUI was at about 175 when we heard that.
5) These Newsletter guys, and Gold/Metals -Website guys who scream”Bear Market Coming” the loudest… I do sometimes wonder if they are turning around and loading the boat.
I invite everyone to visit my new messsage board for Campbell resources (CCH.TO / CBLRF.OB). Campbell is an oldline, oldtime, copper/gold producer that is making a stunning turnaround. You can still buy the shares for just a few pennies more than Sprott will be paying. (Sprott is financing them). |
