Good afternoon
The PMI came in stable, as expected, for China, and manufacturing numbers in the US were pretty strong, while car sales slumped more than expected.
The market is probably worried today about another weak day for the Chinese currency hence equites as well as metals are trading lower as well.
Growth in Austrlia was very strong in the 1st Quarter, 1.1% QoQ and 3.1% YoY - but really driven by exports, and not the lacklustre, local economy. I think there is still a good chance for more interest rate cuts in Australia later this year.
Pretium Resources in the States gave us a good example on how you can legally try to manipulate the market...the company announced a drill intersection of 31m with 150 g, which is fantastic - but they also announced 0,5m at 9200 g included in the above. If you compare the numbers, it turns out, that the 30.5 ex this fantastic grade had an average of about 1g in them....But it certainly sounds a lot nicer, when you report 31m at 150g...anyway - great results - but as so often, it´s worthwhile to look at the details!
Lucapa Diamonds - the long awaited drilling to search for the source of their excellent, alluvial diamond deposits in Angola is only starting now, as some approvals had been held up unexpectedly before. In the meantime, the news on great prices for quality diamonds at auctions continues, and Alrosa also reported a good result the other day. Lucapa is a very speculative stock, but since option expiry , they are holding more trhan 20mill$ in cash, and will put part of that at work for exploration, and some to increase mining rates. As you probably know, the market is not paying all that much for production from alluvials, as the consistency of it does not tend to be very reliable - finding the source is the big price her, and I would be surprised, if they found it immediately. But having said that, I am holding a position in LOM.
Finders - it has taken a few month longer than expected, but the company announced the first production of copper plate from their new plant/min in Indonesia! Well done and congrats! My god - for how long have I been in that stock! It took years to get approvals, and building a mine on some remote island in Indo does take time as well. All homours to people, who can do that! At just above 2$ for copper, this is not the ripper we origonally expected - but at full production, the cash costs of 88ct/lb are among the lowest in the world - certainly for new projects. Once ramped-up over the enxt few month, the company will concentrate on exploration nearby, to expand the 11 year mine-life.. I think there is no major rise in front of us here ( 23-25ct I am not calling major for such a stock ) - but once copper trades much higher hopefully in 2018 or 2019, we will also see much higher prices for this excellent project.
The other day I read an interesting article, which was referring to well known economist Kenneth Rogoff. he is suggesting, that the central banks of emerging countries increase their holding of gold within their currency reserves, at a time, when shorter term interest rates in many countires are negative, and where there is a shortage of bonds. At first glance, a "shortage of government bonds" sounds absolutely crazy - but in a world, where many institutions are pressed to buy bonds for regulatory reasons, he might have a good point!
Have a nive evening
WS
Wilhelm Schröder
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