major correction due

And the correction is up! By the time Jhamann thaws out, Zinifex will be $20.

The first company is Zinifex (ZFX on the Australian Stock Exchange). ZFX is the largest zinc producer in Australia, producing 6% of the world's demand for zinc. In addition, ZFX supplies 4% of the global demand for lead, a metal also making new highs at this time. Here are a few brief facts about ZFX:

Trades more than 5m shares per day; market capitalisation exceeds US$5 billion.
Current ZFX share price (30 October 2006) approximately A$15.00.
Earnings for year to June 2006 - A$2.20 per share and dividend 80c per share.
Historic PE ratio 6.8; historic dividend yield 5.3%.
Average zinc price received in the 2006 year was 96cUS.
Current zinc price has just made a new all time high above US$1.90c.
If current zinc and lead prices are maintained, 2007 earnings will be at least double 2006 earnings - perhaps A$4.00 per share or more, and the 2007 dividend say A$1.60.
Thus ZFX is trading at a forward PE of 3.8 and a dividend yield of 10.6%.
If zinc goes to $2.50, which is what I expect in the near future as a result of the continuing decline in LME zinc stocks, ZFX earnings and dividends will obviously be even higher.

The point I am making is that ZFX is not trading at wildly optimistic, unsupportable "bubble" valuations. ZFX is trading at the sort of valuation one expects at the start of bull markets. As Richard Russell is wont to say, "Bull markets climb a Wall of Worry". This is what we have in base metals. The overwhelming emotion is fear whereas in bubbles the prevailing emotion is greed. ZFX share price can be justified on historic earnings and dividends. The current ZFX market price takes no account of the bullish numbers emerging in zinc and lead prices