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In reply to: Nicwix on Tuesday 23/05/06 10:31pm

Just remember one important thing, if the brokers all start calling that we have to sell commodities they will probably the ones who are buying.


It happens all the time.

Don't be blindfolded by these statements follow your own instinct and do not lose track of the fundamentals.



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reckon this will put the skids under mining activity in Mongolia....

not sure if any aussie companies are in deep there.


Major miners are taking a wait-and-see approach to the

Mongolian president's decision to allow a controversial new tax to pass into

law, while some smaller players are already signaling cutbacks, sources said


A presidential advisor announced on local television late Friday that

President N. Enkhbayar would not use his constitutional right to jettison the

tax, passed by parliament two weeks ago.

On May 12, the Mongolian parliament shocked the country's nascent mining

industry by enacting a bill to impose a super normal profit tax on copper and

gold exports in an attempt to direct the benefits of soaring commodities prices

back to the country's impoverished population.

The bill sets a 68% tax on any copper exports at $2,600 a metric ton or above,

compared with current prices around $8,200, and any gold exports at $500 an

ounce or above compared with the current price of around $650 price.

Despite speculation to the contrary, President Enkhbayar opted to ignore the

industry's push for a veto by Friday's deadline.

While some Canadian junior explorers have signaled their intention to slash

budgets and cut staff in the country, larger miners are reserving judgment as

legislators continue debating further changes to the minerals and tax laws,

until recently considered one of the most investor-friendly regimes in Asia.

"In isolation, it's hard to know what (the windfall tax) would do to the

industry because the rest of the story is yet to be told," said a spokesman for

Canada's Ivanhoe Mines Ltd. (IVN), which has spent around US$370 million on a

copper project in the country.

Prior to the surprise windfall bill, most observers were anticipating little

support for nationalistic proposals for a return to greater state control, with

changes more likely limited to minor increases in fees and royalty payments,

possibly offset by lower corporate taxes.

"But at this stage it's getting more and more difficult to predict what

they'll do," said Sado D. Turbat, general manager of local mining industry

consultancy Mine Info.

Some legislators who supported the original windfall tax are now understood to

be considering amendments to exclude gold exports, while others are considering

making refined copper exports exempt to encourage value adding.

In a statement Friday, Ivanhoe said legislators indicated the new tax wasn't

aimed at smelted copper, although other sources said the bill's wording fails to

make the distinction between refined metal and copper in concentrate.

Majors Rio Tinto PLC (RTP) and BHP Billiton Ltd. (BHP), whose presence in the

country is limited to representative offices and exploration activities,

declined comment on the impact of the windfall tax on the local mining industry.


The new windfall tax will have the biggest immediate impact on Erdenet Mining

Corp, a joint venture copper mine with Russia that opened in the 1970s.

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Nervous time for resources
Robin Bromby
June 05, 2006
ANXIOUS and uncertain days lie ahead for resources investors, as the metals markets strive to find their feet.
And those investors will have something new to factor-in today: the slowdown in manufacturing growth in the US by 1.8 per cent in April and the slowest jobs growth since October.

The US economic revival had been touted by some analysts as the third pillar underpinning commodities prices, adding an important impetus to world growth on top of Chinese and Indian demand.

Commonwealth Bank commodities analyst David Thurtell said yesterday that US factory orders for April showed very weak growth and indicated at least a short-term pause in the American production cycle.

"That's not to say that everything is going to collapse," Mr Thurtell said.

China and Japan's metals demand could be expected to remain strong. But it's not physical demand that has the metals markets worried. Instead, it's the murky doings of the hedge funds.

Metals prices have been in turmoil in recent weeks with analysts largely pinning the blame on hedge funds.

Copper fell an overall 4.9 per cent last week, but the scale of the volatility was shown by London Metal Exchange prices over just two days. On Thursday, the red metal sunk by $US245/tonne, or 3.1 per cent, but on Friday it was up $US210/tonne to close at $US7850. It was still up 78 per cent since January 1.

Other metals have been similarly buffeted, although analysts are generally agreed that zinc looks likely to have a strong run left in it. The metal closed up $US75/tonne to $US3583 on Friday after LME stockpiles fell to a five-year low of 235,500 tonnes.

Reports quote LME dealers and analysts as saying the high prices and high risk are scaring off the traditional metals buyers, leaving hedge fund speculation to drive prices.

But the week opens with an unnerving lack of liquidity, as those dealers say that, unusually, no new hedge fund money came into metals at the beginning of the month.

Hedge fund investors have been saying that May was the worst month this year for hedge funds, as they gave up gains in commodities, the US dollar and stocks. The speculators are likely to be more timid for a while. But their retreat is likely to mean a lack of liquidity, which could be exacerbated tonight when trading starts because of Whit Monday holidays in Germany and France.

Even if the hedge funds do not retreat, opposition to their immense power is growing. The hedge fund industry is expected to grow to $US2 trillion by 2009.

The International Wrought Copper Council is soon to make submissions to LME aimed at changing the exchange's pricing system to control speculation.

Their case will be strengthened by last Thursday's warning from the European Central Bank that the hedge funds posed a "major risk" to global economic stability.

But investors will be heartened by an unusually upbeat assessment on commodities from "Dr Doom", the Hong Kong-based Marc Faber.

He is predicting strong demand for all commodities for another 10 or 20 years, provided India's growth does not come unstuck.

He believes Indian and Chinese oil demand, for example, will double in the next eight years.

"A tight balance between rising demand and existing supplies could remain in place for quite some time," Mr Faber said.




so the LME stockpile is the same as it was back in 2001, yet in 2001 the spot price was about 50cents.... interesting....

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In reply to: nizar on Monday 05/06/06 10:40am

Have a look at an article i posted on Tuesday 23/05/06 02:57am

(in regards to Marc Faber"s comments)


Marc Faber changes his mind from week to week.

A couple of weeks ago "commodities were going to drop 30%."

This week , he"s gone back to being a bull.

I used to have a lot of respect for Marc Faber, but that is rapidly disappearing.

Another guru i thought highly of is Dennis Gartman , who publishs the

highly respected Gartman Letter. But Denis seems to change his mind from week to week as well. Another thing about Marc Faber"s comments; How you can possibly predict 10-20 years into the future is beyond me.

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In reply to: datum on Monday 05/06/06 05:11pm

Being 'generous', perhaps he means in the short-term commodities were going to drop 30%, but we are still in a long-term bull market


so 2+2 = wait (if you are dollar cost averaging into this bull market, assuming you are working full time with kids & family and only spending a few hours week looking at shares) until these dips occur till you dollar cost average...


the second implication, is that as a buy-and-hold commodity stock investor, one should be aware and comfortable that one is comfortable with -20% and -30% "dips", not just the usual -15% you would expect with industrial shares.


well that is my nicest interpretation!:)

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In reply to: nizar on Monday 05/06/06 09:40am

Hi nizar,

LME stocks are approaching some interesting levels.


Nickel is closing in on 16,000 support, if it fails convincingly, Nickel will shoot over $10 pound.


Zinc is approaching 200,000 tons, below this and towards $2 pound we go.


As for Copper perhaps someone else can offer a forecast.



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In reply to: datum on Monday 05/06/06 05:11pm

smart cookie that marc faber


calls for 30% drop - every1 sells - while hes buying the cheapies


then he's bullish again and the bull is back - and hes made $$$$$$$$



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