Spot gold was bid at $912.50 an ounce at 1417 GMT, against $908.45 an ounce late in New York on Wednesday. U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange rose $3.50 to $912.80 an ounce.

Gold sold off on Wednesday in line with other commodities, slipping to an eight-week low, after the U.S. Commodity Futures Trading Commission said it was considering a clampdown on excessive speculation in commodities.

Afshin Nabavi, head of trading at MKS Finance in Geneva, said the slip was met with some light physical buying in the Far East and Europe.

“We saw some small demand out of the Far East this morning,” he said. “But India and the Middle East is still very quiet.”

“Also, the U.S. dollar is a bit weaker today,” he added.

The dollar gave back some of the previous session’s gains on Thursday as equities firmed in Europe and U.S. stock futures rose, denting interest in the currency as a haven from risk.

A recovery in stock markets after a five-day losing streak, gains in industrial commodities such as oil and base metals and a less cautious tone to currency markets suggested recent sessions’ heavy risk aversion may be abating.

Oil’s tick higher also helped support gold, which can be bought as a hedge against oil-led inflation.

Demand for gold investment products such as exchange-traded funds — a major support of prices earlier in the year amid volatility in other markets — remained sluggish, however.

Holdings of the world’s largest gold ETF, the SPDR Gold Trust , declined more than 10 tonnes on Wednesday, while those of ETF Securities’ ETFS Physical Gold product slipped 12,500 ounces 0.4 percent.

OUTPUT FALLS

In supply news, South Africa, the world’s third largest gold miner after China and the United States, said its output of the metal fell 10.5 percent in May from a year ago.

Among other precious metals, platinum was at $1,104.50 an ounce against $1,096, while palladium was at $235 against $231.50. Both metals are primarily used in car manufacturing as a component in catalytic converters.

Traders of palladium in particular were cheering news from China that its passenger car sales rose 47.7 percent in June from a year earlier.

Chinese cars are usually petrol-fuelled, meaning they use a higher proportion of palladium than platinum, which is a primary component in diesel catalysts.

Dealers say as palladium is still relatively expensive, it is unlikely to immediately post significant new gains, although platinum has met some interest.

“Even though there is very little obvious buying taking place right now, platinum is still managing to hold its head above $1,100,” said one analyst, adding strong turnover in Shanghai suggests good Chinese buying at these levels.

Elsewhere silver was at $12.85 an ounce against $12.84.

LONDON, July 9 (Reuters)

Traders are awaiting fresh direction from the foreign exchange markets after a meeting of G8 leaders later this week.

Spot gold was bid at $922.65 an ounce at 1544 GMT, against $924.00 an ounce late in New York on Monday, having earlier touched a high of $931.55.

U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange eased $1.20 to $923.10 an ounce.

With physical demand sluggish despite a price dip, the gold market is largely being driven by currency moves, traders said.

The precious metal edged lower on Tuesday as the dollar  recovered earlier losses against a basket of currencies. The euro, which was earlier lifted by better-than-expected German factory orders, retreated to turn lower.

“The pick-up in the dollar has put some pressure on gold values today,” said David Wilson, metals analyst at Societe Generale. “All commodities are a little weaker, with oil off as well (and) base metals prices still slipping too.”

“Investment demand for gold has stalled, and that has been the key support for gold for much of the first half,” he added.

A stronger dollar reduces interest in gold as a currency hedge, and makes the metal more expensive for holders of other currencies.

The market is looking for any comments on the dollar’s role as the global reserve currency at the Group of Eight leaders’ meeting starting on Wednesday, which could impact on the foreign exchange markets and consequently on gold.

“We have the G8 this week where there is potential for some discussion about the reserve currency… which could have an impact on the currency markets and indirectly on the (gold) price,” said Simon Weeks, director of precious metals at the Bank of Nova Scotia.

WEAKER

Technically, the picture is looking weaker, with gold’s trade down through the 100-day moving average opening up the potential for a move down to $915, Weeks added.

Investment demand remained relatively soft, with holdings of the largest gold-backed exchange-traded fund, the SPDR Gold Trust , falling 0.36 tonnes on Monday.

Switzerland’s Zurich Cantonal Bank, however, reported modest inflows into its gold and silver ETFs last week.

Physical demand for bullion bars has improved slightly in the last week or so, dealers say, but is far from its peak.

Among other precious metals, silver was at $13.13 an ounce against $13.24. Platinum was at $1,131.50 an ounce against $1,143, while palladium stood at $238.50 against $239.

Both platinum group metals have suffered from the downturn in the car industry, their main consumer. Any sign of a recovery in the sector could trigger a turnaround, analysts said.

LONDON, July 7 (Reuters)

And I don’t know the answer more than anyone else.

However, It stands to reason that one of the best indicators that might give us an early tip on recovery is iron ore shipments.

Iron ore is the basic component of steel, which is used in bridges, buildings, ships, pipes, cars and trucks. Even concrete highways and bridges have steel rebar embedded in them for added strength. It’s perhaps the largest ingredient in the infrastructure of the industrialized world.

World production of raw iron ore averages about 1 billion tons per year, with China alone producing nearly half the total. Australia and Brazil produce nearly 20% apiece, and roughly 54 other countries make up the rest of the production.

One of the largest producers of raw ore is mining giant BHP Billiton (NYSE:BHP), based in Australia. Engaged in the mining of metallurgical and energy forms of coal, oil, gas, diamonds and other base metals, Billiton also operates some of the largest iron ore mines in the world.

The company has 41,000 employees working over 100 mining and extraction operations in 25 countries around the world. Last year, the company generated revenues of nearly $60 billion, and roughly 25% of that was profit.

Rising Shipments: A Positive Sign

One of the best places to gauge iron ore shipments is Port Hedland, in western Australia. The Port Hedland Port Authority keeps track of iron ore shipped from its docks, and May’s total was 13.39 million tons, up 18% from April’s 11.33 million tons. BHP’s portion of May’s total was 11.12 million tons.

To put this in perspective, last June – at the height of the China driven boom – BHP shipped 12.26 million tons out of Port Hedland.

BHP recently put together a joint production venture with rival Rio Tinto, PLC (NYSE:RTP) that is expected to save the two companies $10 billion annually.

Both miners are trading roughly midway between their 52-week highs and lows, and are two of the best ways to gauge economic recovery from the ground up (pun intended).

Source: BHP Billiton (NYSE: BHP): Stock of the Day

And the green shoots brigade gained a firmer hold on investor sentiment. It has become okay to say that the global economy is out of the woods and that the rally in US stocks could be the beginning of a new bull.

Is this optimism justifiable? This is the question we’ll attempt to answer in today’s Notes.

“The whole credit collapse and the recession must have been a hoax,” writes our favorite underground analyst David Rosenberg at Gluskin Sheff.

Rosie is talking about the latest Investors’ Intelligence survey. It shows bullish sentiment at 47.7% (versus 42.5% the week before) and bearish sentiment all the way down to 23.3% (from 25.3% the week before).

Meanwhile, net inflows into US equity funds have been positive now for 12 consecutive weeks, with a total of $2.83 in fresh capital pouring in the week before last. Another sign of exuberance, as Rosie points out, for contrarian investors.

Maybe the bulls haven’t been paying attention to the catastrophe in exports. This from Rosie’s Friday missive:

The latest data on China’s outbound shipments showed renewed hints of slowing. Same for Korea. German exports plunged 4.8% in April and are off 28.7% from a year ago. Canadian export volumes sank 5.1% in April — and this transcended the problems in the auto sector — on top of 2.3% slide in March, taking Canada into a deficit position of $178 million in what is a vivid sign of a hugely overvalued loonie. U.S. export volumes also dropped 4.3% in April after a 0.5% decline in March, taking the YoYo trend down to a new all-time low of -20.4% from -13.8% in March.

Maybe the bulls just don’t care. This has been our suspicion here at Notes since the current rally US stocks kicked off in March. Let us explain…

The credit crunch and the collapse of onetime Wall Street darling Lehman Brothers last September spooked investors bad. Fear spread over a 1930s style great deleveraging, and stocks plunged as a result.

But are we really experiencing a great deleveraging? The upsurge in US stocks signals that we’re not… as does the more recent rise in crude oil prices. A deleveraging is by nature deflationary. But the rise in base metals, stocks and oil reveal that traders and investors are counting on deflation’s nemesis – and the nemesis of earners and savers – inflation.

We’re learning the lessons of history not by studying it but by repeating it. Warns underground investor Bob Carver over at MarketClues.com:

When the Bankster Debt Bubble burst in 2007 and 2008, it was popular for most to think that a great period of de-leveraging had begun. This happened in the Thirties and led to the Great Depression. It wasn’t pretty, but debt was either written off or paid off. The country learned a big lesson about banksters and how their bad decisions blew up the economy. Once those who had learned those lessons were gone, we had to re-learn those lessons, not by studying history, but by repeating it.”

Or, have we learned the lessons? Today, we not only have not learned the lessons of the Bankster Bubble, we are repeating and expanding the bubble of debt. Instead of a Bankster Bubble, we have a Government Debt Bubble that subsumes the Bankster Bubble and expands it. There is no de-leveraging going on. We are simply blowing a bigger bubble, waiting for the day when our lenders cut off the flow of funds.

Total debt is still rising sharply, according to the Fed’s Flow of Funds Report. In 2008, Federal debt grew 24% and in the first quarter of 2009 grew by 22.6% at an annualized rate. Household and business debt was virtually unchanged, while state and local government debt is rising at a 4.9% annual rate in 2009. Don’t take our word for it. OptionARMaggedon did some charts which show that the debt bubble is still expanding. The last two years were simply a sneak preview of what’s coming when the, by then much larger, debt bubble blows up in the future. The longer this goes on, the worse it will be. The public is sitting idly by while this pile of explosives is being built higher and higher, just waiting for the day when someone with a match lights the fuse.

Put simply, the only way out of a debt induced depression is to pay down debt or write it off. Leveraging up only delays the inevitable.

Given this “leveraging up,” it should come as no surprise that oil prices have risen sharply recently. The black goo is now trading at over $70 a barrel, just off its nine-month high of $73.20. The rate of gain is astonishing: oil prices have risen 100% since their $38 low in January.

Underground investor David Fessler at Investment U recommends four ways to profit from oil’s price moves (three long and one short).

• 1. Certainly one of the big drillers like TransOcean  (NYSE: RIG) is a great long-term play on rising oil prices, as their shares closely mirror the rise and fall of the commodity itself. Shares of the drillers have been absolutely punished, and TransOcean is off nearly 50% from its 52-week high.
  2. The United States Oil Fund LP  (NYSE: USO) is an ETF designed to track West Texas Intermediate (light, sweet crude oil) prices. The fund invests in futures contracts for crude, heating oil, gasoline and other petroleum-based fuels.
  3. If you don’t mind some potential added volatility, PowerShares DB Crude Oil Double Long ETN  (NYSE: DXO) is a long-leveraged Exchange Traded Note available to investors. It’s designed to track the performance of certain crude oil futures contracts, plus the returns from investing in three-month Treasuries.
  4. But if you’re a bit more active in your trading, or if you feel oil is ready for a pullback, you might consider a short approach. PowerShares DB Crude Oil Double Short ETN (NYSE: DTO) is designed to do just the opposite of DXO if you feel that our current rally in oil prices is overdone. For the reasons above, I don’t believe that’s the direction we’re going, but I think DTO is one of the better ways to play a short approach to oil.

Trading is expected to be muted ahead of the interest rate announcement of the European Central Bank on Thursday, traders said. The ECB is widely expected to cut rates by 50 basis points.

Spot gold was at $812.00/814.00 an ounce at 1523 GMT, down from $821.05 in New York late on Tuesday. It touched a high of $828.65 earlier in the session, but slipped as the euro retreated and European equities and base metals turned negative.

U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange fell $8.10 to $812.60 an ounce.

“Gold has fallen as the dollar has increased on a flight to safety after very bad retail sales numbers,” said Calyon metals analyst Robin Bhar.

“People were calling for a pretty bad retail sales number as it stood, but this was even worse than most people had feared,” he said.

December retail sales numbers released earlier on Wednesday showed total sales down 2.7 percent last month, against expectations for a 1.2 percent fall.

The U.S. currency extended gains against the euro as investors spooked by the outlook for the global economy bought into the dollar as a haven from risk.

While in the longer run risk aversion is also likely to benefit gold, in the short term currency moves will have more of an impact on the precious metal, analysts said.

The single currency also came under pressure after Standard and Poor’s cut its credit ratings on Greece’s sovereign debt.

Bullion is often bought as an alternative investment to the dollar and tends to move in the opposite direction to it.

All eyes are now on the interest rates decision of the ECB on Thursday, which will have a significant impact on the foreign exchange markets, and consequently on gold.

“Everyone is in wait-and-see mode for the ECB,” said Simon Weeks, director of precious metals at the Bank of Nova Scotia.

Data released on Wednesday showed the German economy contracted sharply in the final quarter of 2008 and euro zone industrial production plunged for the seventh month running in November.

The data suggested the recession is worsening and strengthens views the ECB will cut rates deeply on Thursday.

CRUDE SLIPS

Oil prices also slipped, giving up earlier gains, on the spate of poor economic data.

Gold typically moves in line with crude prices, both because it is bought as a hedge against oil-led inflation, and as crude can indicate interest in commodities as an asset class.

In Asia, jewellers are buying up gold bars ahead of the Lunar New Year on Jan 26, dealers said. Premiums for gold bars were steady at between 10 and 20 U.S. cents to spot London prices in Hong Kong.

“With Chinese New Year approaching it will be very interesting to hear how sales have gone and whether the strong purchases continue after the New Year holidays,” UBS strategist John Reade said in a note.

Jewellery demand in the world’s largest bullion market, India, has however been lacklustre in recent weeks, as buyers await lower prices.

Interest in investment products backed by physical gold, such as ETFs, is also healthy. Bullion holdings of the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust , remain near record levels.

Among other precious metals, spot platinum edged down to $930/940 an ounce from $941, while palladium was quoted at $178/183 an ounce against $182.

Spot silver was at $10.41/10.49 against $10.72.

LONDON, Jan 14 (Reuters)

This from The Sovereign Society:

Records were broken in 2008 – money-losing records from an investor’s perspective.

U.S. stocks will record their worst calendar year since 1931. As measured by the S&P 500 Index, the broader market tanked 40% this year while the Dow Jones Industrials fell 36%.

U.S. stocks are already “dead money” since 1996. They’ve shown no net gain at all – including dividends. The ongoing market environment is eerily similar to another period of dismal returns – from 1966 to 1982. During those 16 years, the Dow and S&P 500 Index posted zero profits. Adjusted for soaring inflation, the markets actually recorded a loss.

Global equities as measured by the MSCI World Index posted its worst year since inception in 1969. International equities fared even worse with European and Japanese stocks down more than 45% and the MSCI Emerging Markets Index clobbered – down 53% in 2008.

World Markets Got Trashed in 2008

For stocks, the ongoing bear market has resulted in record mutual fund outflows as investors continue to dump their holdings and run for cover into money market funds.

Unfortunately, money market funds are now paying barely any yield at all since the Fed slashed interest rates to effectively 0% on December 16.

Only Treasury bonds, European and Japanese government bonds yielded a profit for investors in a wickedly harsh year for investors. As a currency investor, naturally you already know that the Japanese yen was also a winner against the dollar and euro as the “carry-trade” came to a crushing halt.

So Much for “Diversification”

With the exception of super-safe and low yielding U.S. Treasury bonds, yen and gold, the entire gamut of assets from stocks to non-Treasury bonds all plummeted in 2008.

Commodities, certain currencies, fine art and hedge funds all succumbed to brutal price declines. Overall, 2008 was the first losing year for U.S. and global stocks since 2002 and the worst period to be invested in financial and hard assets in more than 75 years.

Stop-losses rang out like pinball machines in 2008. Diversification across sectors, industries, countries and currencies proved futile. Almost everything was pummeled. By October 10, a panic gripped world markets as the threat of systemic collapse threatened the viability of the banking system.

Chaos to the Rescue

In late 2007, I introduced the TSI Chaos Portfolio, to my Sovereign Society readers. It’s a U.S.-based portfolio of six equally-weighted investments, including short-term Treasury bonds, gold, Japanese yen and reverse-index funds that bet against the S&P 500 Index. Recently I added a seventh safe-haven – short-term German government bonds.

This cost-effective strategy dominated my recommendations in 2008 rising more than 17%, including dividends.

For growth investors, hedging your market exposure is vital in a secular bear market. I continue to like the TSI Chaos Portfolio in 2009 even though the stock market has probably suffered the bulk of its declines at this point.

Volatility will remain rampant in an uncertain economic environment marked by growing consumer credit woes, massive government bond issuance to support gargantuan fiscal spending plans and weak corporate earnings. Investors must hold downside market protection.

Short Most Commodities, But Stock Up on Gold & Silver

Starting in October 2007, I recommended my Commodity Trend Alert (CTA) subscribers begin to bet against oil and gas stocks as a way to hedge against the energy sector. At the time, oil prices were racing to US$100 a barrel and the oil stocks were in the midst of a multi-year bull market. We all know how that story fared in 2008.

Since peaking in July, the benchmark CRB Index has crashed more than 50% as the entire commodities complex continues to aggressively deflate in a rapidly slowing global economy.

To protect our natural resource exposure in CTA, I immediately issued a series of reverse-index purchases betting against commodities. We were most successful betting against industrial metals or base metals, as copper and other metals collapsed. That position, still open, has gained a cumulative 80% since August 2008.

And since September, CTA has been riding a broad commodity index to the basement as part of our reverse index strategy – up more than 60%. We also maintain hedges against gold, oil, gas and long-term Treasury bonds.

Gold has also been a strong performer compared to most other assets in 2008.
Significantly, gold is the only asset that is completely outside the credit system and the only asset that has no liability.

In 2008, spot gold prices gained a modest 1% – not much in absolute terms but certainly impressive compared to other plunging assets. Silver, more of an industrial metal and therefore more vulnerable to broad economic trends, declined 18%.

Looking ahead to 2009, growth investors will only reluctantly return to stocks. Losses have been massive for investors since late 2007 as mutual fund redemptions hit records.

Stocks might indeed offer better values compared to mid-2007 after plummeting more than 40% from their highs. But domestic consumption in the United States, Japan and Europe is depressed and likely to remain under threat as unemployment rises and savings rates begin to rise again.

The correlation between a higher savings rate and corporate earnings is negative. It’s difficult to be bullish on earnings when the world’s largest economy will remain mired in a period of sluggish growth, debt retrenchment and rising job losses. The same is true for Japan and Germany – the second and third largest economies, respectively.

This is not the time to be aggressively buying stocks. Odds are prices will get cheaper again following any bear market rally. That’s certainly been the case every time stocks have rallied off their lows since October 2007.

Instead, make sure your portfolio includes gold, portfolio hedging strategies and income from high quality investment-grade corporate bonds in 2009.

Source: Rising from the Ashes: The Three  Investments You Need to Own for 2009

Copper benefited from the strength in crude and the shakiness of the dollar, most of which had to do with the amped-up strife in the Middle East. Analysts generally believe any rally will be short-lived as demand destruction continues apace.

Supporting the pessimistic view were stockpiles that show no signs of slackening in their buildup. Copper inventories monitored by the LME gained another 5,250 metric tons yesterday, to 336,700 tons. Stocks have now risen 70% on the year, and are at their highest levels since February 2004.

The amount of copper now in LME and Shanghai warehouses is equivalent to 7.4 days of global demand. In contrast, the average was for 2007 was 4.9 days.

There was also sector-wide commodity strength, as the Reuters/Jefferies CRB Index of 19 raw materials climbed as much as 1.3%, led by energy and metals.

And aluminum got some support from stockpiles which have finally begun to ease a bit. November inventories were 1.4% lower than in October, according to a report from the International Aluminium Institute.

While stocks declined to 1.6 million metric tons from almost 1.63 million tons in October, the IAI said, they are still well above year-ago levels, which were 1.47 million tons in November 2007.

Source: Base metals modestly higher - Copper inventories higher, but aluminum stocks drop

This from Investment U:

Consider that your computer could contain up to 38 separate chemical elements and that all of those elements needed to be mined and refined. Everything from cell phones to housing supplies requires massive amounts of raw materials.

Our modern lifestyle encourages us to buy the latest products, all made with increasing amounts of technology – and more raw materials.

But industrialized nations aren’t the only players clamoring for these commodities. Developing nations around the world are pounding the table for more of everything. They want what the industrialized west has had for years. And they want it now.

And that’s just the problem. There isn’t enough of it being produced fast enough to satisfy everyone. An imbalance exists between producers, supplies and the market. It means that there will be an inevitable correction.

Prices will skyrocket for base metals and commodities. And for investors aware of this “supercycle,” the rewards and returns could be immense. Here’s what you need to know about the international demand for commodities – and how you can profit from their price explosion.

Supplies Are Low – And Demand Remains High

The whole idea of a supercycle, of higher commodity prices, remains well intact. Even with the recent slowdown, a massive supply/demand imbalance exists in the marketplace right now.

And nothing has emerged to change that story.

“It is a mistake to assume that current volatility within the commodities sector is proof that the prolonged rally in commodity stocks is running out of steam,” says Ian Henderson, manager of the JPM Natural Resources Fund.

“It is also misrepresentative to attribute it to a change in the basic fundamentals of supply and demand… In reality, it is the self-perpetuating irrational market sentiment in itself which is causing a sell off…”

In the short term, however, we’ll likely continue seeing a softening of commodity demand, along with a decline in prices. But that’s okay because stock prices already reflect the new paradigm in which mining companies are operating.

Mining companies sit at extraordinary valuation levels right now. So buying now ensures that you’re grabbing shares at rock-bottom prices.

But in order to make the most of the opportunity, you need to look above the forty-ninth parallel, to Canada – the world’s investment hotspot for profits from the bull market in metals.

Simply put, Canada is the preeminent leader of the world’s mining sector. According to Paul Stothart, Vice President of Economic Affairs at the Mining Association of Canada,

“About 19% of the total global spending on mining exploration was for exploration within Canada’s borders, well ahead of Australia at 13% and the U.S. at 8%…”

Consequently, Canada’s mining industry will be crucial to satisfying the world’s needs because of its experience and technological capacity. And Canada’s mining-friendly laws only add to the country’s investment appeal – a far cry from other resource-rich countries where regulators are downright hostile. But it’s not just the producing nation that we need to worry about.

Fact is, the United States, Europe and Japan are no longer the only countries vying for the world’s resources. Other countries with young, blossoming economies are now demanding an increasingly larger piece of the pie.

The BRICs (a conceptual coalition of emerging superpowers, which includes Brazil, Russia, India and China) encompass over 40% of the world’s population and hold a combined GDP of $12 trillion dollars, which makes it the largest entity on the global stage on almost every scale.

These countries are in the midst of an unparalleled building boom that is consuming resources like never seen before.

In China right now, a city the size of Philadelphia is springing up every 30 days. (It is estimated that China will need enough structural steel to build a Manhattan’s worth of new buildings every year for the next two decades.) And within another 20 years, China’s economic output is likely to be greater than Japan’s, greater than Germany’s, greater, even, than the United States’.

In short, these countries are going to be fueling international growth for years to come. They’re hungry for the new resources needed to continue their astronomical growth.

Solid Growth at a Deep Discount

Now that you see the potential, there are plenty of ways to profit from this commodities boom. You could trade futures… stockpile gold coins… even buy a copper mine. Unfortunately, none of these approaches – for obvious reasons – are very practical. They don’t make sense for the majority of investors.

But that doesn’t mean that we can’t profit like the titans of Wall Street. The recent turmoil in credit markets – and corresponding volatility in the stock market — has handed us an extraordinary profit opportunity for a number of companies

So we’re advocating a more direct approach to mineral profits. With such a pure supply-and-demand opportunity, a more pure play on precious metal prices is warranted for the largest gains. Accordingly, we’re going straight to the source and recommending buying shares of the mining companies themselves.

Lundin Mining Corp. (NYSE:LMC) is a Canadian mining company with facilities located around the world, which is run by its namesake, the Lundin family. They are easily the most important family in mineral and energy exploration finance around the world.

They amassed a fortune in commodities – valued in excess of $4 billion – when oil cost about $20 a barrel and gold traded for $300 an ounce. By having an innate ability to spot value. In fact, just about everything this family associates with ends up being a massive commercial success.

The Lundin family’s flagship mining operation is trading in the $1 to $2 range, which is about 70% off of its October 2007 high, thanks to the recent commodity cool-off. That means that investors who buy now will get this incredible mining operation for less than half of its book value. Even better, our analysts say that the book value should be much higher than it is, which makes the case for investment here even stronger.

Furthermore, LMC has no debt, which gives it an incredible edge over most other industry players. It can fund its growth entirely on the cash it generates from operations – and not have to rely on the credit markets.

Fact is, the credit crunch is far reaching. And tighter lending practices have meant fewer loans to risky mining ventures. That leaves most miners in a pinch – but not LMC.

Lundin Mining is a phenomenal play on base metals, specifically copper, nickel, lead and zinc. Its operation includes six mines around the world, including five key mines in Portugal, Spain, Sweden and Ireland. Here are some highlights of these massive and highly productive mines:

• Zinkgruvan, Sweden: The primary metal produced is zinc, with lead and silver as byproducts. Costs have been reduced by 22% over the last year and new copper production is scheduled to begin in 2010.
• Neves-Corvo, Portugal: It’s an underground copper and zinc mine. Last quarter’s sales surged 52% over the same quarter a year ago. And it just approved a new program to profitably process mine tailings, which should substantially improve margins. (Mine tailings are the materials left over after processing the ore.)
• Aguablanca, Spain: This nickel and copper mine recently bumped operating efficiency up 46%.
• Galmoy, Ireland: About 100 miles from Dublin, the lead and zinc mine benefits from having a sound infrastructure already in place.
• Aljustrel, Portugal: The lucrative zinc mine is still ramping up capacity, which gives us an opportunity to get in on the ground floor.

What’s more, Lundin Mining has a few up-and-coming operations in the pipeline that are showing incredible promise, too.

One is the world class Tenke Fungurume copper/cobalt project in the Democratic Republic of Congo. It’s being touted as the largest and richest known copper/cobalt discovery in the world, covering almost 600 square miles of the Katanga Province. This blockbuster mine has an expected life of 40 years. And is projected to be in the lowest quartile of operating costs for copper producers.

The reasons for owning Lundin are numerous, but in spite of its enviable (and growing) inventory of proven reserves, shares can be had for a steep discount. The company is valued at $2 billion, which is only 0.63 times its book value. Even better, the forward price-to-earnings ratio is a measly 5.73, despite the company’s mines having a growth rate around 30% to 35% a year.

The market’s been noticing Lundin’s value as well. In recent days, a takeover bid has emerged that could drive share prices higher if it’s approved. However, in light of the number of merger agreements that have gone unfulfilled, there may not be a takeover.

Regardless, of whether it happens or not. These developments should serve to remind you that while the market may not see the value in Lundin, it’s competitors do. And so do we.

Source: Unearth Big Gains from the Commodity “Supercycle”

Zinc also rallied until mid-morning, but then eased for the rest of the day, ending at $0.5256/lb., down more than a third of a cent. Aluminum peaked in the pre-dawn hours but sank through the day, just coming off its intraday low at $0.7759/lb., down three-quarters of a cent, while lead followed aluminum closely, winding up with a loss of a third of a cent, at $0.5259/lb.

Copper rebounded from a fresh 3½-year low to post a day of solid gains amid a great deal of short covering.

Still, most analysts continue to view the demand situation for copper as bearish, considering the extremely weak U.S. housing sector, concern about the possibility that U.S. automakers won’t get the government bailout necessary to avert bankruptcy, and surging London stockpiles.

Inventories monitored by the LME rose again yesterday, gaining another 1,500 metric tons, to 283,125 tons. Stocks are up about 20% already in November. On the other hand, Shanghai copper stocks fell 3,797 tons, or 18%, a drawdown somewhat greater than expected, but not enough to offset rising stocks elsewhere, and a growing international surplus.

Concerning aluminum, traders are “pricing in expectations of further stock builds, which we concur with,” wrote Barclays Capital analyst Gayle Berry in London. LME aluminum levels are at their highest since December 1994.

Meanwhile, prices of nickel and zinc have fallen too low to cover costs for perhaps half of the world’s production of the metals, says Eugen Weinberg, an analyst at Frankfurt-based Commerzbank. Production cuts will help stabilize prices of industrial metals for the next three to six months and “as soon as China’s demand picks up, prices will pick up,” Weinberg believes.

In company news, Canadian mining giant Teck Cominco announced it will slash spending, suspend dividends, sell assets, and withdraw from the Petaquilla copper project in Panama in an effort to ease the debt burden generated by its acquisition of Fording Canadian Coal Trust.

But on the optimists’ side, HudBay Minerals has unveiled a plan to buy Lundin Mining Corp, in a friendly deal that “creates a new Canadian leader in mining.” To replace Teck?  We’ll see.

Source:

The base metals were mixed on Friday. Copper bottomed below $1.48 in the pre-dawn hours, but then pushed higher until the late morning, when it came off its highs to finish at $1.5752/lb., up 5½ cents. Nickel rose from the pre-dawn hours to mid-morning, trailed off, but then rallied late to close at $4.5503/lb., up 9¼ cents. Zinc also rallied until mid-morning, but then eased for the rest of the day, ending at $0.5256/lb., down more than a third of a cent. Aluminum peaked in the pre-dawn hours but sank through the day, just coming off its intraday low at $0.7759/lb., down three-quarters of a cent, while lead followed aluminum closely, winding up with a loss of a third of a cent, at $0.5259/lb.

Copper rebounded from a fresh 3½-year low to post a day of solid gains amid a great deal of short covering.

Still, most analysts continue to view the demand situation for copper as bearish, considering the extremely weak U.S. housing sector, concern about the possibility that U.S. automakers won’t get the government bailout necessary to avert bankruptcy, and surging London stockpiles.

Inventories monitored by the LME rose again yesterday, gaining another 1,500 metric tons, to 283,125 tons. Stocks are up about 20% already in November. On the other hand, Shanghai copper stocks fell 3,797 tons, or 18%, a drawdown somewhat greater than expected, but not enough to offset rising stocks elsewhere, and a growing international surplus.

Concerning aluminum, traders are “pricing in expectations of further stock builds, which we concur with,” wrote Barclays Capital analyst Gayle Berry in London. LME aluminum levels are at their highest since December 1994.

Meanwhile, prices of nickel and zinc have fallen too low to cover costs for perhaps half of the world’s production of the metals, says Eugen Weinberg, an analyst at Frankfurt-based Commerzbank. Production cuts will help stabilize prices of industrial metals for the next three to six months and “as soon as China’s demand picks up, prices will pick up,” Weinberg believes.

In company news, Canadian mining giant Teck Cominco announced it will slash spending, suspend dividends, sell assets, and withdraw from the Petaquilla copper project in Panama in an effort to ease the debt burden generated by its acquisition of Fording Canadian Coal Trust.

But on the optimists’ side, HudBay Minerals has unveiled a plan to buy Lundin Mining Corp, in a friendly deal that “creates a new Canadian leader in mining.” To replace Teck?  We’ll see.

Source: Base metals mixed – Zinc and nickel seen selling below cost of production

This from Taipan Daily’s Emerging Markets blog:

Right now, copper spot prices are an anemic $1.65 per pound. That’s an amazing drop from above $4 back in June.

And yet, one Chilean copper mine is actually expanding.

The mine is called Dona Ines de Collahuasi. It’s Chile’s third largest copper mine and is located in an historical copper mining area. Back in 1880, a large, high-grade copper and silver vein was found. It’s one of the world’s largest copper resources.

Right now, the mine produces roughly 440,000 tons of copper a year.

But the mine has just approved a $64 million project that will increase annual output by 30,000 tons. And that’s just the first expansion.

At the end of the first quarter of 2009, a $750 million expansion plan will boost production to 650,000 tons a year. After that expansion is complete, the mine intends to increase production to a full one million tons of copper a year by 2014.

That’s an astounding move.

And one that will need some major financial backers, particularly if copper prices don’t recover. It’s a good thing some big companies own this mine.

I’m talking about Anglo American (Nasdaq:AAUK) and Xstrata (LON:XTA), each with a 44% stake. There’s also a Japan’s Mitsui (Nasdaq:MITSY), owning 12%.

The CEO of the mine, Jon Evans, told the newspaper Diario Financiero, “The mid and long-term plans are the same, therefore our expansion plans are also the same.” Which may pay off in the long run… If it can survive depressed copper prices.

And copper prices have continued to fall, despite a huge cash injection by China to its economy. China is the largest user of many of the industrial metals, like iron ore, aluminum, zinc, and, of course, copper.

So with China’s economy slowing (albeit to 7.5%), the country will use less of those materials.

Now, China’s been part of the reason why copper prices had more than doubled since 2002. If Chinese demand continues to slow, that could mean a long time before we see copper prices begining to climb again.

Which would mean that Anglo American, Xstrata and Mitsui will have to wait for the returns on these major expansion.

But it would also mean that they’d be ahead of the game once things begin to turn around… If they can afford it.

Source:Copper: Chilean Investment Still Expanding