A couple of months ago I used the analogy of a car dealer to explain the tin price. Each morning the car dealer would rub-out the car price painted on windscreen and rewrite price with an extra $300-400 added. The cars remained identical... but each day the price rose. People would hurry to buy the car in fear it would be more expensive the next day. Yet cost to dealer remained stable. What a great business!!
Craziest part is the tin price was 24k when i wrote that post around early december. The story hasn't changed but the numbers certainly have. Last night tin surged through $32,000 without batting an eyelid. Closed 2% higher at well over $32,300/ton!!! It's almost hypnotic watching the price ratchet-up.... day after day, week after week.... and now month after month. From 12k only 20 months ago to 32k today. That's a price rise of 20,000 smackeroos for every ton!!! Where will it end? I can't say but i sense that we are about to see some strong action.
VMS, MLX are small-fry companies with huge assets and high margins/potential margins. MLX mine in its 120th year of production and VMS about 2 years from production. I have limited understanding of TA but even I can realise the impact a graph describing an unbroken price-rise for 20 successive months can have!!!
My feel is that day-traders are going to grab these tin-pot companies (excuse the pun) by the scruff of the neck and throw them around like a cork in the sea. Some will sell within hours and some will hold for a day or two. But hold onto your hats and expect to see some strong buying, big volumes and frantic price changes in SP. Fortunes will be made and lost. Me??? I'm holding-on for a wild-ride.
MLX Price at posting:
35.5¢ Sentiment: Hold Disclosure: Not Held
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