Ian Huntly gives CMR a push in his "Your Money Weekly" report today. He personally has owned a tidy parcel of this stock for years.
Here is part of his story
Rio has long been regarded as an excellent forecaster of metal prices and demand from China, so too BHP in recent years. Both are now optimistic, and why wouldn't they be with iron and coal prices rocketing! Copper is a smidgen off record highs. Vivek Tulpule, Rio Tinto's chief economist, predicts global demand for copper to grow by 4% pa for the next 10 years or more led by China. 'The slowdown in the US economy is not expected to have an effect on commodity demand,' says Tulpule. He also emphasised the bullish case behind Rio's Alcan acquisition, where the business is underpinned by rising aluminium prices but more importantly locked-in long-term energy costs.
These sky-high commodity trends drive the Australian resource infrastructure boom, which in turn spins off extraordinary multipliers and pushes our employment growth to unsustainable levels. That is unless our immigration levels can soar in harmony with the IMF's offshore distress signals.
My worst case for copper is for it to fall off to around $US2.20/lb late this year, consolidate for a year or two, then move up sharply again as the economies move on from the current panic. The record copper peak was in May 2006. That $US2.20 is still an excellent copper price. If you take a line through metals trading house Trafigura, which forecasts Chinese demand alone to rise 20% to 5.4mt this year, and technical analysis which projects the potential for mid-$US5 copper you can argue a more optimistic case! Nymex copper futures are plus $US3.62/lb out to March 2010 while the July 2013 LME futures are over US$3.00/lb. Oil is essentially plus $US100 out to 2015!
YMW Portfolio: Will add a $20,000 holding in Compass Resources up to $1.60, hopefully closer to $1.50. This is speculative as much depends on the imminent ramp-up to production. The resource itself looks excellent, the agreement with the Chinese is very helpful, and the board is experienced.
It all sounds like common sence to the Redfrog, however some may not agree about the board being experienced.
CMR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
