I'm currently working on the "Asset Bubble Madness" that is missed by Institutions...the driver will be their panic. Having had an excellent weekend with what Leggie would call Shorters Anonymous, I have come to the conclusions for what I believe will happen over the next 6-12 months. Yes there are a global number of shorters that enjoy their trade and get together to drink (mainly that) and debate...I suspect it'll revolve round Iron Ore and other contributors. The low cost producers will always be ok, "its the others that won't be."
Hopefully over the next week I'll update this page about the impact of 'such asset bubbles' and what they meant to investors.
All the best (ATB) Fraser
Fraser
ReplyDeleteYes- several markdowns overnight re iron ore expectations with some showing $80 as a poss low point- I must say my doomsday scenario takes it down to $90 but all bets are off if the Chinese economy does hit the buffers, as set out in Mr Pestons debt bubble piece last week. I can also see that the Chinese will continue to run enterprises at a loss in the long term, as seen from the steel mills example and there are other anomalies in the global iron mkt too, plus plenty of ore is stockpiled too, so the "commercial" producers could be hit hard and it may not take out all the loss making miners. Now that the $120 level has been broken, the next few weeks will be interesting. In the meantime, gold is getting a short term spike from the Ukrainian moves. This is manifesting in a split between low cost prods (MML- up 12%) and high cost ones (POG down 5%) so some quality control in this area at least.
Cheers. The Leggie
Hi Leggie, The Iron Ore price revisions are creeping through, some significantly lower than previously. From what I can see is, the Quality Iron Ore *(Australia) will benefit from this as they 'bet' on economies of scale riding them through the rough periods with operating costs significantly lower than most others i.e. able to make a profit.
ReplyDeleteThe secondary lending is the issue in China, that I've mentioned before and this appears to look like a house of cards waiting for default. The Government, despite 'assuring' that they would not get involved in with those types of lenders, has been bailing them out on the "QT".
Gold needs a direction, but Ukraine might not be enough to show it which way!
It shall be interesting all the same, Iron Ore's price was clear once $120 was broken, I'm looking to 113 before I revision my opinion.
POG (Petropavlovsk) is down not because costs, but because of the "Russian" links that have created a further risk. Albeit with most of the Debt based there, it has a lower risk, POG's issues are the return for shareholders, which is dire, but admittedly buying/paying down debt on the cheap. Speaking of cheap Debt, 63% Yield on New World Resources?
Atb Fraser
Fraser/Ian
ReplyDeletePerhaps we ought to highlight the OXS late RNS from yesterday- Sturgeon Capital converted their $1m loan notes into shares, mainly at 12p per share.
As the Chairman says, its a good sign re their confidence in the result here.
Cheers. The Leggie