GEOFF CANDY: Moving from the company side to the commodity side, we're seeing records hit by gold, by silver, by copper - copper is at a two year high. We touched on this last week as well, but clearly there is a theme growing here in terms of the look of copper. The supply side of things is expected to be tight going forward, but what's going on?
BARRY SERGEANT: The broad global theme at the moment, probably the dominant one, is that developed market economies are not growing as fast as emerging ones and some people say it's a brain dead thing - you take money out of developing economies and you put the money into emerging economies - whether it's commodities, whether it's currencies, whether it's underlying stocks in those countries, and so on. Well that has the sound and the smell of a bubble around it and we've seen a number of currencies get really overheated. Countries are now starting to make a lot of noise about it - South Africa is one, Brazil is another - and even some developed market currencies such as Japan trying to intervene in the yen - like the Swiss franc becoming one of the worlds hottest currencies. It's not just emerging market currencies - there are others as well. This is not a straightforward story. If you look at the commodity spectrum, we're seeing gold and have discussed that endlessly - as have a lot of other investors too - in base metals, copper is the one that is pulling out the best performance of the year so far. Some call copper 'Dr Copper' to the extent that it is seen as an early indicator and an ongoing indicator of changes in global economic activity. Copper is very much a commodity that goes straight into emerging market economic growth and is used - it doesn't get stored, it doesn't get recycled in any big way - it's very much an indicator of what is actually being bought and put into things like buildings and telecom structures. So copper is telling us that, all things being equal on the supply side, emerging markets are growing strongly and that the underlying growth is robust. Therefore that is encouraging investors to go into, not just commodities, but also the underlying stocks and currencies.
AVB Price at posting:
18.0¢ Sentiment: LT Buy Disclosure: Held
