re: commentary.zinc rerating Thanks for that article Greg.Very...

re: commentary.zinc rerating Thanks for that article Greg.Very interesting read and backs some of the bullish thinking on zinc without forgetting the possible negatives.

The price of zinc is at a very interesting juncture and its quite possible now that if zinc holds above $1.65 we could be on the way to $2+.I think the big fundamental factor in all this will be the continued tightening of stockpiles.With cancelled warrants at 33,500t we have effectively dipped below 100kt in the stockpiles.We may now see that with every drawdown of 1000t plus a commensurate rise in the price until the market feels the right value is being put on this rapidly diminishing commodity.If one looks at the 1 year Copper and Zinc price charts we have defiitely seen dislocation of these two metals with copper relatively flat and zinc up strongly.Imho zinc looks like its on its way to its rightful
place beside copper/nickel as a scarce commodity.

This may be stating the bleeding obvious but I think some patience is required here as Greg alluded to a few posts ago.There is still obvious selling pressure on Aim but we are still seeing good support for the stock even if the buy depth is looking a little weak.Someone is targeting the options atm around 7c and imho its excellent value if Aim does get the digit out in the not too distant future.

The main reason for patience(with Aim) is this current move in the zinc price.With no real supply expansion on the horizon for at least a year its looking an almost odds on bet that the stockpile will be sub 50,000t by early next year with obvious implications for the zinc price an therefore the potential to get an excellent price for the zinc concentrate.

Analyst murmurings are now starting to jibe with some of our assertions that the Chinese growth is more internally sustained and that has been backed in the last couple of days by comments from Bhp management that maintain that only 1.5% of Chinese growth is externally driven via exports and most of this is not metals driven exports but clothing and toys.Bhp fully expects Chinese growth to continue around the 10% mark.Company rhetoric?Perhaps.But these guys wouldnt have played their recent game of chicken on the iron ore price with the Chinese and won without their analyst boffins being close to the mark.

d.