Ok , i had a drink and a puff of cosmic smoke and now looking...

Ok , i had a drink and a puff of cosmic smoke and now looking into the glass again. Have given yas reasons why i think megabear C is nigh, the reasons for the mess, the possible triggers to stay alert for, the possible evolution of Ursa Majoris wreaking destruction thru all classes of assets, the possible targets based fibo/cosmics/olympian analysis .... and yes, the good stuff will go down the drain with the bathwater as it too is cashed in to pay the debts of the bad stuff.

Asset preservation is the name of the game during this DEFLATIONERY wave where CASH IS KING and held at call at higher interest rates in the 3 major banks only with a bit under the bed and a bit inc the golden insurance policy in the safety deposit box. Likely timing is anytime from now... AUG and NOV poss danger times next Likley duration is 2 years ......... IFFFFFFFFFFFFF I am on the ball.

(A) So WHAT IFF I am right ?

Well ORM no debt, 80 cash / 20 CMR Olympian scout MO keeps ya sleeping nites and alert to the firesales due at the end of it.

Unemploymeent will increase, debt default will abound, there will be no easy money on offer from the banks, consumer demand will be a memory, yuppies will be forced outa their Port Melbourne town houses and back to their parents' homes, psychology will dampen to say the least. Interest rates will rise in competition for remaining liquidity and further feed the rot. Olympians will head for sunnier places far from the madding crowds ...probably adrift the Med with their select crews and mobile laptops, keeping one eye on the welfare of the 3 main banks their funds are mostly kept in.

Re listed companies :

(1) Mature stocks' earnings will FALL ......AND

(2) Price Earnings RAtios will ALSO be downramped by the prevailing mood to something akin PER 7 average (from current PER 14) to compete with the lack of demand and higher interest rates likely.

Consider a 50% reduction in earnings coupled with a halving in PER gradings ....... theres ya 70% fall in the share index.

Consider also the US SPX is currently trading at around 20 times earnings. Maybe my DJIA 3600 prime C-5 target is a bit generous ?

(3) Specs will hibernate into deep freeze hoping their existing funds can meet listing requirments to ride out the rot ....... IFFFF they ARE capable of raising more funds, it will mean existing shareholders will be diluted to insignificance ..... cheap shells will abound.
Half will disappear off the boards and into distant memory. The other half into spiv's hands.

If u think this is fantasy, well let me tell u I have LIVED thru this four times in my trading history but to varying degrees. Megabear C in current market would set new standards.

*******What happens then ?

Well as global market pie shrinks, there will be pump priming panic attempts around the world in competition for the remains.

(1) Currencies will devalue in attempt to stimulate depressed economies.

(2) Countries with less to lose will fare relatively better

(3) Countries with lower employment costs will fare better .......... bringing home the TRUE meaning of globalisation the west has been "complaining" about ..... west will fall to meet the east instead of east rise to meet the west. They who complain should beware what they seek to gain.

(4) Resources demand and hence prices will initially fall with global demand slowdown and less competitive mines will close down. Efficiencies will improve in survivors as cost reductions ensue both naturally and imposed. However, weakening currencies will buffer price earnings declines in the leaner and meaner survivors. Remember that once a mine closes , it takes considerable time to re-open again. The surviving producers will reap the benefits of the subsequent turnaround.

(5) Increased pump priming attempts per currency devaluations with interest rates managed to manage the rate of fall will outstrip falling commodity prices due to slowing demand, to point where commodities and resources wld bottom and reverse first.

(6) Since commodities/resources are priced in USD and it would take major changes over considerable time to change this structure, and since the USD is likely to suffer most during a global slowdown cos of its current debt / deficits postion, CRB index values will begin to rise in real terms with plunging USD ..... espesh as other currencies joined in the musical chairs of paper devaluations.

(7) Likely derivatives domino wipeouts would add further impetus to the evolution of a wholesale dumping of paper mentality in favour of hard assets ......... the beginnings of the Kondratieff supercycle "C" upwave.

Pause here ........ a megabear C downer would crunch all asset classes and trigger the Kondratieff "B" retrace wave. Ensuing paper devaluations / pump priming would trigger the Kondratieff "C" supercycle upwave.

Kondratieff resources cycle began in 1999 and is expected to run its historical usual 15 years. It is a metals / resources / war cycle. 1999 start saw the "Balkans War". Then we had Irak 2. Now we are poss entering a pause in hostilities with corresponding retrace in commodities. Later pump priming after a megabear C downer may also include another "stimulatory" war .... Iran? N.Korea?

Kondratieff-C is a resources boomwave and capable of fuelling the general "D" wave rally of the broader market. But since resources sector is only a small part of broader market, even a major rampant resources bull in the surviving cost efficient producers would only part rally the broader market in technical retrace to the megabear"C" crunchwave.

Likely timing IMO for this K-C wave is end megabear C downer sometime around 2007/8 and roaring into a 2010/11 peak. then pause during megabear E and final move to some kinda D/T by its end circa 2014.

K-C is a cost push INFLATIONERY component ....... soaring resources/metal prices for surviving olympian producers fuelled by devaluing paper currencies.

An inflationery K-C coincident with depressed asset value megabear-C and ensuing flatline D and E in broader markets, gives us our severe STAGFLATIONERY period likely for western economies holding major debt possies ahead ...... US, Oz

Gold will do its own thing in K-C as it decouples from the alternative to USD paper currency defacto role it presently retains and assumes its possie as king of the kids as USD money supply is once again moved into hyperdrive.

So long as ORDER is maintained and the financial world as we know it survives thru this without derivatives markets implosions throwing us into chaos, gold will prob hit USD 2000 / oz some time 2010-2014, and maybe even assume some kinda role as USD standard again to stop the rot.

If on the other hand we have derivatives dominos the order of the day, gold sovereigns may end up being the only legal tender for buying our bags of rice. A hedge to this poss is to keep some gold coins as insurance just in case , as well as plant fruit tress and a vegie patch in our back yards. Back in 1987, I recall a broker mate of mine suggest the only hard assets of value in the world ahead were gonna be the 3 "B's" ..... bullion, bullets and barbed wire. Bit harse at this stage and coming from a wealthy man as he ........but that comment has remained in my mind since.

I subscribe to order being maintained but also true globalisation emerging at the end of this megabear viz equality but at a lower level for the west.

*******How does this affect CMR ????

So long as CMR achieves its modest schedule of conservative production and expansion, it will be in the envious position of being one of the lowest cost / highest earnings ratio producers on the Board.

At equivalent 3.5% Cu grade from top 20 meters surface open pits in simple heap leach in middle of infrastructure with plant payback less than 1 year and lotsa reserves, CMR is sitting very pretty.

And even a PER 6, appropriate to a megabear C downer, based conservative metals prices / AUD buffer and preferred supplier status likely, it is the best I can find on the Board atm and hence my own hedge against coming adversity I expect.

Risks remain in delays in approvals / project financing and getting caught by the megabear C. Rewards far outweigh the risks given current market cap in relation to PER 6 expectations on STARTER project alone.

Producing ex oxides thru any market downturn puts CMR in the further enviable possition of being able to pick upo the pieces of failed pseudo Olympians around it. At modest 50 mill pa earnings expectations over min 6 and prob 10 or greater years, it will be in a possie to pay considerable dividends thru any period of adversity whilst building its own warchest. A reduced number of resources producers candidtaes means that some of our industry's super money would find its way into CMR, prob providing better than my PER 6 expectations even in a downer market.

Likely fall in AUD /USD would proba provide better earnings results than I have allowed for.

Steady growth thru any C-downer wave would set it up for the ride of its life with a likely K-C following as the bear wiped out much of the competition available to attract public investment funds.

Sulphides expansion within a K-c inflationery metals wave coincident with its mature oxides production would set it into warp-drive with the megabear D rally wave. U would want us to also have a GOLDEN flavour at that time. K-C would provide CMR with the drivers to take full advantage.

*****And what if Im wrong ?

Hallelujah brothers amen !!!! If we just mosey on down the road with no major hurdles .... then expect the most even faster. If China keeps booming away and metal prices keep moving up, we will still have a falling USD cos of defits etc but in an ordelry fashion. And likely PER 10 wld be used instead of super-conservative 6 ...and even out to PER 15 once the longlife sulphides project came into full swing. We wld prob still get a K-C upwave but based on real demand instead of paper devaluation driven....tho that too wld still prob coincide.

Case 2 of course is preferred cos no-one wants to see pain. But i keep thinking of those virtual derivative markets stacking up[ like dominos, and whatever the final outcome, feel better holding equity in hard assets suite .........about 8 differnt metals at last count ........providing us with flexibility and making us a likely PRIORITY target for a great white at any time.

And as Huntleys cite, the "speculative" tag gets dropped with project finance. .... and thats gotta be getting pretty close now....and THATS when the instos start looking forbig licks ...and there aint likely to be enough to satisfy them.

Bit rushed at end but can answer specific questions as u ask them.

Dont forget my priority still remains CASH and looking for the comfort trigger to move some of that back into resources.

Hope I got it right.