You used the right word Mook.Volatility is now the buzz word.As...

You used the right word Mook.Volatility is now the buzz word.As the stockpile gets tighter the price will react even more to negative/positive news because funds are so involved.Its being treated much more as a short term investment rather than a demanded commodity just as copper has been since it went critical.Zinc and copper have disconnected to a degree but it seems zinc is still being moderated by rumours of slower US/Chinese growth.So they will still have some common price moving factors but the overiding one for zinc atm is the tightening stockpile.

Nickel has been over bought(by funds no doubt) imho so at the first sign of stockpile increase it will get hammered as it has.

There are signs that zinc has already reached its REAL demand threshold price with some Chinese manufacturers substituting galvanised 1mm sheet with aluminium.But then Al is on the rise too and if this reaches the same threshold cost they may move back to gal sheeting,although Al has some distinct advantages over gal steel it also has disadvantages,inherent strength being one.Manufacturer dependant and something you would have to watch numbers/reports on.Like I said in a recent post though this could just be market loose talk from the Chinese.They arnt silly and will do anything to battle the positive/commodity pumping comments coming from zinc manufacturers and fund linked analysts.

Ultimately the real proof will come from the LME numbers.Note that cancelled warrants are decreasing which COULD intimate a slowing in LME drawdowns if they keep dropping past the 20,000t mark.

What we really want to see is continued REAL demand backing up the fund buying.One of the problems now being we are now moving into a more hysterical phase of zinc investment imho.So yes we SHOULD see more cash flowing into zinc and its associated stocks but it also has more downside too as any part of a spike rally will have.This being said I am of the opinion that with supply to be demand/supply to be relatively flat post the deficit zinc should stay somewhere in the $1.50/$1.80 range.

The big variable atm is whether or not China have been telling porkies re their selling off of zinc into the open market and whether their domestic production is on the increase to the extent they can start dumping quality zinc onto the spot market.Only the next couple of months will show if this is true.

In a nutshell,believe what these producers and analysts are saying at your peril as many have vested interests in this market.The stockpile numbers are the only true measure of the market and these could come into question too if the Chinese have been stockpiling to any degree.

As far as shares are concerned it appears zinc stocks that are producing or are getting closer to production will be favoured.At the risk of inciting a UCL riot
note that UCL did not move much yesterday after the big move up in zinc.

As far as Aim are concerned to keep this momentum going they now need to produce some annmnt worthy news.I would say the minimum they need is the newer project numbers.What will really interest the market is just how much they hedge.But I wont get into this too much as this is the zinc thread

d.