buyback, page-28

It was $32 twelve months ago. Its going to report profits 25% in excess of last year's profits. The discount being applied to the stock was on talk of the end of the resources boom. Market sentiment towards the end of the boom is changing as actual inventories for nickel, zinc, uranium, tin and lead sink to sub-day level supplies. The general decline in commodities was driven by sentiment linked to the overdone correction in copper prices. Now that this correction is unwinding (Chinese inventories were not as stocked as hedge funds had claimed/rumoured) there is very little that commodity bears can rely on for their shorts.

Given that BHP profit has risen in a year when commodity prices declined a little, once the market forms the opinion that there is another leg up on the resources boom, a premium rather than a dscount will be applied to BHP.

The increase in price should be at least a 25% premium to its previous high to reflect its performance, and will probably be higher than this.

I think it will hit $50 by Christmas.