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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: koan who wrote (88989)	8/19/2007 5:22:45 PM
From: Metacomet	Respond to of 313343

I am comfortable with base metals in this market. The infrastructure growth in Asia as well as demand for pipelines, nukes and all manner of energy related components should keep the string tight for a long time.

To: koan who wrote (88989)	8/19/2007 6:14:17 PM
From: LoneClone	Respond to of 313343

If it's all in the curves, then copper stocks are shining brighter Headshot of Fabrice Taylor FABRICE TAYLOR theglobeandmail.com August 18, 2007 'We welcome this adjustment as a potential buying opportunity," HudBay Minerals' chief executive officer said this week. The adjustment Peter Jones was referring to was the evaporation of billions of dollars worth of investments in mining company shares. Mr. Jones had just finished releasing solid financial results. HudBay, a mid-tier base metals miner, hasn't taken part in the frenzied mergers-and-acquisitions game of the past couple of years, so one might have assumed his comments were well timed. One might further have assumed that with a fast-growing cash balance of almost $600-million and no debt, Mr. Jones would have the resources to make an acquisition that would create wealth for his shareholders. Investors might have finally have concluded that his stock, changing hands at less than seven times earnings, had appeal. No. His stock shed 5 per cent of its value instead. Print Edition - Section Front Section B Front Enlarge Image The Globe and Mail A similar reaction greeted Lundin Mining's announcement of earnings and of the closing of its deal to buy Tenke Mining. Lundin, unlike HudBay, has been marching down the acquisitions trail lately. But like Mr. Jones, the company is bullish on metal prices because of brisk growth in the world economy. Another acquisition, Rio Narcera, will close soon, and Lundin will have all the major base metals in its arsenal. Investors? They ran from the stock and its seven times price-to-earnings ratio. These are only two companies that sketch out the disconnect between what's happening in the real world and what's happening in the financial markets. In the real world, if we can rely on the words and actions of mining company brass, voracious consumption of metals continues and won't stop for quite some time. Investors, meanwhile, price shares as though we are at the peak of the cycle, just before earnings collapse. Who's right? That's a hard question to answer with airtight conviction, but it's worth taking a stab at it. If the miners are right, their companies will be worth a lot more in a year or two. If bearish investors have it nailed down, those companies will be worth a lot less. For help, we lean on UBS's base metals analysts, who took the bold step of publishing a cautious recommendation on copper yesterday. The firm's starting point is base metal forward curves - that is, the price of the metal for future delivery as quoted by the London Metals Exchange - which the analysts have found to be a reliable indicator of share price performance. Despite the stomach-turning volatility that infected just about every market these past two or three weeks, the forward curve for copper has been remarkably steadfast. Copper-related equities, including Lundin, HudBay, Freeport-McMoRan and others, meanwhile, are down 30 per cent since they peaked in July. The shares are so beaten up that they're trading at a 30-per-cent discount to their "net asset value," of what they are roughly worth, assuming the forward curve and cost estimates are correct. In early 2006, the group traded at a 40-per-cent discount to this measure of intrinsic value. They went on to post spectacular gains. Earlier this year, the group traded close to net asset value on the back of merger speculation. Buying then was not a good move. The forward curve hasn't been a perfect predictor but it's not bad at all. Could it be wrong this time? Sure. Economic growth could stall badly. Or there could be heavy speculation in the futures market, artificially lifting the price of the metal. Anything is possible, but for the record, few economists are predicting the kinds of mauling that recession perma-bears are calling (and hoping) for. As for speculation in the futures market, the short end of the curve did sell off about 8 per cent but longer-term contracts actually rose slightly in the past month. If there was speculation, it likely would have run its course by now. Although market indexes recovered yesterday, the action was mainly in the financial group because most investors still aren't sure that they want to risk investing in commodity plays. Meanwhile, HudBay's Mr. Jones and his peers are coining it. UBS figures that by the end of next year, cash in the bank will represent 20 per cent of the market value of the copper companies it follows, and almost 50 per cent for HudBay. That cash will be put to work buying back shares or buying other companies. If that forward curve is any sign, investors with sea legs and conviction can buy a piece of that action at decent prices right now. Fabrice Taylor writes research for brokerage firm Pollitt & Co. The views expressed are his own. taylor.fabrice@gmail.com

To: koan who wrote (88989)	8/19/2007 11:14:13 PM
From: Proud Deplorable	Read Replies (1) \| Respond to of 313343

BWR.wt at 1.50 isn't too bad is it? But how much further can it fall? I bought at 1.90 originally sold at 1.75 CD has to love this one as he made a fortune on it. Since they have no internet in Sardinia he can't tell us what his entry point was until he gets back to civilization.

To: koan who wrote (88989)	8/20/2007 12:11:22 AM
From: russet	Read Replies (2) \| Respond to of 313343

One very important question you want an answer to is how much base metal China imports, goes to production of goods and manufacturing, processing and transport facilities for export, and how much is just for domestic construction and manufacturing for domestic consumption. These numbers are difficult to get a handle on. Much of the construction in Chinese cities is not just for export production facilities, but to house and service the workers flooding in from the countryside to work in the export production plants. The Chinese economy is highly leveraged to exporting. The Chinese economy is also centrally controlled. Decisions made by bureaucrats are not necessarily sound economic ones. A world recession, even a short small one could result in enormous overcapacity in China, with a lot of pain for tens of millions. Are the Chinese preparing for such problems? It's akin to someone with no training or experience driving a formula one racing car thinking they know everything about racing,...it invariably results in a big crash. Are the mainland mandarins listening much to their Hong Kong business counterparts?