Market Update

General - Lucapa

Good afternoon

a little bit of profit-taking today across all markets - equities, bonds, oil - but gold, base metals and bulks/steel holding up very well. In fact, metals recovered a bit from weaker prices in the Asian time zone. Not a bad effort at thenend of a strong week!

September has been a pretty good month for most commodities so far - even copper is up by a few percent, and many of our resources stocks have seen strong interest as well.

It´s really funny, and pretty much teh same situation as in the early years of the bull market back in 2003-4-5: The analysts are adjusting their price forecasts from very low levels for stocks in coal, iron ore, gold ( and generally, nobody had foreseen these strong rises at the beginning of the year! ) - only to be still substantially lower than spot prices. As their earnings-estimates are based on their forecasts for prices/currencies, they are running behind the reality all the time! I like that - very healthy for the market!

Quite some talk about Deutsche Bank being in real trouble...provisions for litigation etc look like they are 5 bill$ ( that´s a guess...could be 2 and could be 10! ), and unfortunately for the bank, there is every willingness in the States to treat Europeans as badly as possible, following the 13 bill Euro tax claim against Apple. Not that I m hoping for Deutsche to go under - but I think a nice little banking crisis in Europe would´nt hurt the gold price. 

Interesting little fact: The GDXJ ( Junior Gold Explorers - that contains all the midsized producers ) has outperformed the GDX ( large gold miners ) by a massive 45% this year! Basically all of this outperformance has happened since early March.

We have all got very much used to the unthinkable from just a few years ago, that Central Banks around the world are still embarking on 180 Bill US$ of QE every bloody month...governments and large corporates are issuing bonds , and tehy get soaked up straight away by the printing-department of a central bank - especially the BoJ, and the ETB. Just imagine the other untinkable: This lunatic becomes president of the US! large tax-cuts, big spending programs - and I guess all financed by the Central Bank, the treasuries of large banks around the world, who are regulated to be large buyers of these things...The last few years have lulled us into consternation, and in getting used to the unthinkable! Sometimes, and when you do your asset-allocation, not bad to remember this - and to remember, that commodities are hard assets! A t of copper is a ton of copper and will be a ton of copper in 5 years time - a government bond is a government bond, and will be what in 5 years time?????

Lucapa Diamonds - the chairman bought another 200.000 shares the other day - I know, that this is not small change for him...Lucapa are pretty much priced on their alluvial operation only, if that - if they find the pipe, it´s worth a multiple...Obviously, a few people are shying away from Angola. I think it would be very good news, if tehy´d list in London - the market there is much more used to diamonds, and to investment in weird countries...The company has stated, that they are contemplating this.


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