Market Update

General - Dacian -Lucapa

Good afternoon,

Martin Wolf, the probably most highly regarded commentator of the FT, is writing today:

““In 1933, Joseph Goebbels stated that,”The modern structure of the German State is a higher form of democracy in which, by virtue of the people´s mandate, the government is exercised authoritatively while there is no possibility for parliamentary interference, to obliterate and render ineffective the execution of the nation´s will”. It is a measure of how far the UK has fallen that Boris Johnson, the prime minister, often sounds rather like this””.

Stark words, and probably a little overdoing it…but certainly remarkable and some truth in it! This is coming from an English writer!! And the same probably could be said about some other Head of State across the ocean!

Looks like today, on Jom Kippur, there has been an attack on a synagoge ( perhaps even two, unclear at this stage ) in Eastern Germany, with at least two people dying…

Back to markets….

Some signs for a small trade agreement….I guess both parties need some relief! Equities are rather strong in Europe, bonds weaker. No big changes in base metals…nickel stocks down by a new record amount, 8900t today…this is a lot of money, equivalent to approx 136 mill US$! Cancelled warrants are still showing a big position and high probability, that stock-withdrawals of nickel will continue. Some consumers are really worried - I doubt, whether somebody is “playing” this market so big, otherwise. The strange thing is, though, that analysts seem to be pretty convinced, that there is enough nickel around in the moment, and also enough stainless steel - and use of nickel in batteries is not all that large, at this stage - probably around 50.000t this year out of a 2 millt market, and of that, half suitable for batteries. Only time will tell! In any case, the situation supports the nickel price, which continues to trade at around it´s 5-year high.

Gold ETF´s had their 17th consecutive day of net-inflow in a row - the longest since the dark days of 2009! Investors as well as central banks are adding to their holdings very consistently…it feels like there is more to come! Total holdings of gold in ETF´s are still less than the net worth of Mr.Bezos!! If the world seriously turns to buying gold, we could see much larger quantities being needed! In today´s crazy markets, the current inflows are still only just a trickle…if they become a wave, we would be in for a lot of fun!

Dacian - an excellent production report for the last Quarter, ahead of the full Quarterly Report.The company delivered 42.000 oz gold last Quarter - at least in line with the stated guidance for the Half Year of 67-77.000 ounces . Looks like they have generated free cash of 19 mill A$ for the Quarter. I dare to say, that Dacian has turned the corner - whether they are still relatively cheap we might find out with the full Quarterly report in a couple of weeks.

Lucapa Diamonds - also an early production report out today - and very strong , indeed! Lulo in Angola produced 67% more than in pcp ( second best Quarter ever ) and the new mine in Lesotho, Mothae, had a record Quarter, Both mines also produced very large amounts of quality stones - very important in a market, which seems to be divided in a weak market for average qualities, and a strong market for good qualities. Whether this is true, we will find out shortly, once LOM have held their next tender! But all indications are, that this is a very cheap stock, notwithstanding the overall problems in the diamond market. Petra Diamonds seems to be on the cusp of going under with approx 500 mill$ in debt, and share prices of the entire sector are very depressed. But I think certainly in the case of LOM, this is very much overdone! Let´s wait for the tender results, to have more clarity!

Have a nice evening


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