Hi HH. I initially took solace in the fact LME copper stock piles were decreasing. To me it was a good sign because it had ALWAYS been a good sign.... You pointed out otherwise - China stockpiles, I think were rising.
You were right.
The declining LME stockpiles did nothing for cu and now that the 2016 speculative bubble in commodities is being unwound in China, we are starting to see another decline. One wonders if there will be yet another leg down for commodities....I had thought we had seen the bottom in April when it hit $2.20. Now, I am not so sure. Even if AVB are digging out the grades they estimated in the drilling numbers, the lower prices that they will sell into doesn't help them with the long term goal of building PB because of the way they have to finance that project.
Am sort of glad I am out of commodity stocks for the moment (except gold - I grabbed some TBR a couple of weeks back). Its amazing how the ASX has closed higher for 6 consecutive weeks, dragging even stocks like BHP (+14% last 6 weeks), FMG etc higher with it. But still no joy for AVB - they are just in a really bad space structurally (gazillions of shares on issue). Were this company in private hands and away from the scrutiny of equity markets, I am sure the owners would be delighted with what has been achieved. But because it is listed, the owners are the Mums & Dads that invest in markets, and the only way to measure success is by looking at what returns these shareholders have received in exchange for handing over capital at 10c, 8c or whatever. For now - just a horrible investment to "stuck" in. The future 24 months must surely bring better times (finally) to the share price but I still worry that all the artificial demand brought about by all the speculative trading could lead to some sort of capitulation in commodities. That could get ugly in the short term.
People keep telling me that TD rates in the Bank are horrible, and that you can't get a decent return but with interest rates negative in half the world; commodities falling again; equity price declines more than negating whatever dividends people are getting (banks, Woollies, BHP, RIO etc); and deflation starting to appear on the commentary pages of the business section...all these risks make TD rates look relatively attractive!
AVB Price at posting:
6.2¢ Sentiment: Buy Disclosure: Not Held
