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Gold/Mining/Energy : ZINC The base metal. News and Views. Symbol Zn
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To: Stephen O who wrote (181)4/30/1999 1:42:00 PM
From: Ray Hughes   of 3270
 
Stephen:

We are hearing from London:
Huludao smelters in China closed for maintenance until May 10. Our source figures this will cause production shortfall of 12-13,000 tonnes.

Large amount of fund trading seen over the past week. Large amounts of options buying in near-dated calls. Source figures funds are gambling they can create squeeze and validate the call buying strategy. Says funds buying in copper and gold over past 2 years shows they can be such large buyers as to "generate the outcome that was sought."

July 2001 contango has fallen by almost 80% in the past week while premium for Nov-Dec 1999 has risen on back of Y2K fears. Consumers and merchants fear they won't be able to get metal due to computer systems failures. There is speculation that a large inventory-buying spree pre-Y2K will cause a "run" on zinc supplies. Source is actually "seeing more enquiries concerning physical deliveries for November and December 1999 than we would normally expect for this time of year."

On the flip side, source expects (and so do I) that $1,100/t (US$0.50) is a major resistance level. I believe, however, that a solid upward breach (caused by Y2K??) could trigger major speculative computer-generated buying.

Mininig Securities Analysts are jumping on board the zinc story with a vengeance in the past 2-3 weeks. I'm seeing a vastly increased willingness by Analysts to write positive research reports. Also, the media is chiming in with good coverage.

The mining share bear market is dead. Long live the Bull (or is that just a male calf?).

Ray
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