Category — Resources
May 3, 2013 Comments Off
Buyers are viewing the current fall in the price of gold and silver as an opportunity to grab a bargain — not a time to panic.
Have you tried to buy some gold or silver bullion yourself?
You might find it’s not as easy as you thought. I recommend you go through one of the usual dealers to see what I mean (and get it a sensible price). Just be prepared for a wait. This note on the Ainslie Bullion site says it all:
‘We’d like to apologise to our customers at having to close our web store this afternoon. After the craziness last night we have been overwhelmed on the trading floor all day with buying at these prices. With a back log of internet orders as well we could not be confident of having stock to supply new orders and took the decision to close the website rather than sell something we couldn’t deliver. We hope to have it back up soon tonight after a stock take now trading has finished.’
April 28, 2013 Comments Off
The global mining industry is in the midst of a remarkable shift toward complete automation through technology. It has similarities with the automobile industry and the changes they went through over the last 30 years.
For example, Unmanned Aerial Vehicles (UAV’s) are now performing geological surveys and investigating safety issues at mine sites and rigs. The US Geological Survey’s head of UAV Projects Mike Hutt compared the cost effectiveness of using UAV’s rather than manned aircraft. Hutt says that,‘It may cost $2,000 an hour to rent a helicopter…our costs for sending a couple of operators out with a system [UAV's] is under $200 an hour.’
If we look deep into central Brazil, VALE SA are constructing giant conveyor belts that start at their iron ore pit and go straight to the processing plant, eliminating the need for trucks all together. The whole operation monitored by a ‘Star Trek’ control room, satellites and sensors.
It’s not so farfetched to see the whole mining ‘pit-to-port’ process being run by a few operators (with degrees in Computer Gaming) and automated systems. It really is mining of the future.
My point? There’s a major shift happening right now to be smarter and better in the operation of mines across the globe. This shift is being driven by the need to lower costs. It’s also being driven by the growing demand for resources and the difficulty of extracting them from increasingly challenging places.
But at its core, this isn’t a mining story. It’s a technology story. Once you understand how technology drives progress – and has for all of human history – unlocking new investment opportunities becomes a lot easier, and a lot more exciting! [Read more →]
April 7, 2013 Comments Off
I was chatting with Rick Rule last Friday. Rick is now part of Sprott Asset Management, one of the most respected natural resource investors around. Rick also had a ridiculously good long-term track record in managing money before joining Sprott.
Anyway, Rick has a new thesis he is hot on: platinum and palladium, or more broadly the platinum group metals (PGMs). I’ve learned when Rick gets hot on an idea, it is worth listening to him.
The thesis is simple, as most good ones tend to be…
The Law of Supply and Demand
‘What we discovered in about four weeks’ work,’ Rick told me, ‘is that the platinum and palladium mining industry as a whole does not earn its cost of capital. What that means is that either the price of platinum and palladium go up or there is less and less of it going forward.’
Another way to say it is that the platinum and palladium business, as is, doesn’t pay investors enough for the risks they take compared with alternatives. So it means people will not invest new dollars in the sector.
No new investment in mining means depletion of existing mines with no new sources of supply. Eventually, the price has to go up as rising demand (or flat demand) presses on a diminished supply.
What’s unique here is that platinum and palladium face particularly challenging supply constraints. [Read more →]
April 3, 2013 Comments Off
April 1, 2013 Comments Off
February 27, 2013 Comments Off
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February 5, 2013 Comments Off
‘China has set its initial target for economic growth at 7.5 percent for a second year and tightened its inflation goal to the lowest level since 2010…’ – Bloomberg News
The Chinese government must be the world’s best economic forecasters. They set a target and whadda-ya-know, they get it almost spot on. Today’s Age reports:
‘The December quarter GDP growth rate of 7.9 per cent was faster than expected and up from 7.4 per cent in the September quarter, which was a three-year low.’
Perhaps this boost from the previous quarter explains the sharp iron ore price rise (see chart in today’s other article Money Weekend Market Digest ). The price had almost doubled since last September’s low. But after hitting a new high last week, the price has hit a snag.
What does it mean? Has China done all of its iron ore buying for the year? If so, why has it stopped? Has China’s stimulus program already stopped? We know, that’s too many questions. And unfortunately, we don’t have all the answers. But we can shed some light on the risk and reward o fresources investing… [Read more →]
January 22, 2013 Comments Off
In the last twelve months, the iron ore price has been up and down like a five-year old on red cordial.
First it plummeted from $150/tonne last April, to $89/tonne by August – a 40% drop in just four months.
That’s a savage correction.
But then the bounce of all bounces followed
In the four months since the correction finished, the iron ore price has now jumped 74%, to reach $155 /tonne.
Not only has it recovered all the lost ground from last year, but it now sits at a 15-month high. Giddy stuff indeed; and now Deutsche Bank analysts expect iron ore to hit $170 within weeks. [Read more →]
January 17, 2013 Comments Off