Franklin - FMNJ - LME Zinc Inventories -
Its perplexed as to why LME zinc inventories are continuing
to rapidly shrink, with the current high price for zinc
having so little impact to discourage zinc depletion -
It's like watching a train wreck in slow motion -
Aren't high prices supposed to slow down consumption? -
As explained, zinc inventories of 85,000 tonnes will last
about 85 days at current depletion rates, whereas zinc
inventories need to last about 700 days, or two years until
new zinc projects come on stream -
Zinc Prices set to continue to explode -
Why can't the owners of zinc figure this out? -
This appears to indicate that we will see an explosion
of zinc prices within the next three months,
which is needed to slow or halt inventory declines? -
Why are zinc prices not already higher--high enough to
slow down the inventory drawdown to sustainable levels?
What explains why zinc inventory drawdowns are seemingly
not affected by the existing high zinc prices? -
How much higher do zinc prices need to go? -
What is going on in the zinc market? -
About 60% of zinc is used is galvanized steel -
Zinc is about 3% by weight of galvanized steel -
on average -
Since zinc is a minor ingredient in steel, the market
can sustain and tolerate and absorb substantial price
increases -
prev. noted that zinc was up by "60% in 60 days!"
So, moderately higher prices will not significantly
slow down demand, and are already high enough to stimulate
explorers and investors--even though it takes years to
set up a large scale mining operation like you see on
"Modern Marvels" -
But here's something else to consider -
How much zinc is traded on the spot market verses
the futures markets?
Derivatives can be a big problem, and may be thwarting
the free market process whereby higher prices are
supposed to cause reduced demand -
Perhaps many end users are not paying $2/lb. for zinc
at all! Perhaps many end users are still only paying
about 50 cents per pound of zinc!
And thus, there is still little incentive for many zinc
consumers to conserve zinc usage -
How is this possible? -
Stupid miners hedged! -
Apex Silver and Penoles are two miners that have hedged zinc
how widespread was this practice, and how much damage has it
caused, and will it yet cause?
We don't yet know, but the future will find out -
Apex Silver hedged, 358,150 tonnes of zinc x x 2204lbs./tonne
= 789 million pounds -
Ex. Since Apex hedged zinc at around $.48/lb., at $2.04/lb.
for zinc, that's a mark-to-market loss of $1.56/lb.,
or $1.2 billion dollars, since Apex still has not yet
started to mine any zinc -
That's a larger loss than the market cap of Apex Silver -
Apex also has losses on the silver and lead -
Apex also sold 1/3 of their hedging liability -
and 1/3 of their project to Sumitomo -
Apex has not yet covered the majority of their hedges -
claiming that their future losses will be realized as
they come due, since they hedged 358,150 tonnes of zinc -
silver, and lead for up to 7 years -
Apex may be providing zinc to the market at well below
free market prices, about 51,000 tonnes per year,
at $.50/lb., for the next 7 years -
Perhaps some fortunate end user who will have a tremendous
competitive advantage since they will not only get zinc -
cheaply, but also hopefully won't have to stand in line -
to get zinc during a time of crisis! -
Perhaps this partly explains the upcoming disaster unfolding
in the world wide zinc market -
Call it a disaster because zinc prices should have risen
higher, sooner, to affect all market participants equally,
to help to most efficiently and appropriately ration
(by price) the remaining zinc that we have left -
Instead, it seems that big companies that made stupid
hedging mistakes are continuing to supply many zinc users
with sub-economic, low priced zinc, which is -
not encouraging them to conserve -
Its the drawdown of zinc inventories is continuing at
an unsustainable pace, and it looks like we'll see either
a terrible shortage of zinc, or an explosion -
of zinc prices -
The key flaw of communism is that when prices for goods
are set below free market prices, shortages and misery
are always the result -
Just don't see how anyone can justify futures contracts -
as a part of the ideal free market -
Futures contracts, by definition, lock you in and force -
you to perform, and are the exact opposite of freedom -
An analyst says: "I expect zinc to be selling over $2.50
a pound in 2007 -
After that, sky's the limit -
With the right conditions I believe we could be looking
at $5 or $6 zinc within a few short years." -
marketwire.com
contr. partl. by Jason,
FMNJ - Cerro Rico Ore veins -
250,004 tons of zinc - by shallow drilling -
great bonanza periods have been reported for the quality
of the mineral, with ore contents between 1,500 and
9,000 Silver ounces per ton -
and est. reserves are about 938,130 kgs of Silver -
by very shallow drilling -
dd --
franklinmining.com.
Are the lemmings following LT Bucky? -
U.S $ INDEX (NYBOT:DX) -
FMNJ - dd --
franklinmining.com
FMNJ - Cerro Rico - Inca - Potosi or “Rich Mountain” -
250,004 tons of zinc - by very shallow drilling -
great bonanza periods have been reported for the quality
of the mineral, with ore contents between 1,500 and
9,000 Silver ounces per ton -
and est. reserves are about 938,130 kgs of Silver -
by very shallow drilling -
dd --
The Worlds Richest Silver Mines -
has been mined for more than -
- 500 years -
Est. 1864 -
franklinmining.com.
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