we need to keep abreast of changes which will drop the silver price and thus the Cobar SP
probably the most important issue for now is the general market
although it is hard to be sure how things will pan out in the near term, we must all understand that bear market forces are du jour.
We may get one or two more quarters of relative stability before the inevitable leg down, a function of deleveraging debt liquidation.
there is just way too much debt to factor in a real recovery. There are only so many trillions of real money to go around. Australia is a minnow in the debt market. We could pay very high prices to borrow, when outcompeted by the US and others.
the recent rally is actually "stimulus", which is in fact public debt (you and me in the near future, watch Ken Henry like a hawk).
We pay for Rudd's thinly veiled vote buying antics. His multi-billion internet filter (who actually wants this?), his ridiculous upgrades of schools in the middle of nowhere and his idiotic pink batts.
most people don't care if money is thrown at them, but they will, when interest rates on borrowing rise significantly
and rise they will. Already the banks have broken ranks with the RBA.
the real estate market in Australia is one of the most severely unaffordable in the entire world, if not the most. They rely on an ever expanding debt market, but it is near critical mass, in terms of their primary debt market, residential mortgages.
all this palaver does have a bearing on this stock, if we think in terms of the general market forces, which seems to me to be the paramount variable.
The government is entirely responsible for negative gearing and home owner grants. I find it disgusting that the median house price has risen 25% in a year in Melbourne. It is suicidal debt leverage. But it buys votes.
Perhaps it will last until just after the election, as perhaps is planned, to get your vote.
but you know what is said, when America sneezes we catch the cold.
so what will happen next to us?
In a deleveraging crisis, which could be severe and sharp, people will sell out of every asset they have, to keep a roof over their head
the government will support these voters, taking from people they call rich and giving it to people they call battlers
I personally find it reprehensible that I have to pay for these people, who have nothing but debt
I think you should buy a house and have children when you can afford them
It is totally irresponsible of the government to disadvantage people who are trying to save for both of these cardinal life objectives, whilst stealing from them to pay for people who don't have the savings, so that these people can breed and own a house.
Our stock market will fail badly with a US led worldwide liquidation into cash.
Don't forget Australia has a floating currency and is regarded as a "risk" and "commodity" currency. It has proven itself very volatile in the last 2 years of GFC, rapidly lurching from near USD parity to 60c and then back to near parity.
It may be only an entree to the main course. This is the nature of Australia's debt risk.
Who can forget how our rising mining stars turned to China when their pants were down?
We may see some interesting dynamics come into play with a flight out of "commodity currencies"
But we also need to take into account the unease which US creditors have with the long term viability of the USD as world reserve currency.
This could be a scenario of great volatility and therefore, potentially big moves up and down.
It is a time to pay attention to global affairs. You could do very well with an appreciation of such volatility, especially in a stock like Cobar.
Silver will take off under 2 circumstances, if it behaves as money (a stampede to monetary metals) and as an industrial commodity, in a supply squeeze/panic.
But first we may see the price shockingly fall, if China is unable to continue the commodity boom, in the near term.
China needs to maintain growth at or above around 8% p.a., in order to maintain the peace.
China is a country of 1.325 billion people, which is comprised of 56 minorities. There will be upheaval if the rural Chinese migrating from the impoverished west to urban east are unable to get jobs.
That's serious when you have 1.3+ billion citizens to cater for.
Long term, China is industrialising, if it survives in its current incarnation. Silver should soar if it holds.
Who knows what will happen, but we must consider, as silver and silver equity holders, what the issues are at hand.
CCU Price at posting:
24.5¢ Sentiment: None Disclosure: Held
