AUSTIN METALS LIMITED (ASX:AYT) - SCI - potential multi-bagger copper/cobalt/gold stock?, page-97 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by JFI ↑

Hi prawn_man,

The simple answer for us is that by hook or by crook we are in the right stuff at the right time. Both the macro and micro picture for SCI are very favourable perhaps more so than even the company realises.

There is big stuff in play globally. My take on the major theme is the US's strategy as I see it. Its my take that they are trying to balance a push/pull of inflation to wriggle themselves free from a financial economic conundrum. Set behind this strategy is a poker game of do they have the gold reserves they claim and of an internationally approved standard of finess and sizing. These are big questions. They are trying to do the impossible almost... they are weakening the US Dollar to try and make trade more advantageous with foreign enterprise and reduce and potentially eliminate deficits whilst trying to bring about some moderate inflation as a by product to improve their debt/gdp ratio. Their relative debt carrying burden if you like. If this is reduced markedly without run away inflation Trumps goal of a highly productice and competitive economy may actually eventuate. As this process continues they will look to raise interest rates and hope eventually to return them to a long term (100's of years) normal level between 5-6% imo. This can be done so long as 'inflation expectations' is managed and I think the US has the tools to manipulate public opinion quite well in that regard. Their aim imo will be to keep inflation just ahead of interest rates enough to improve debt/gdp ratio but not so much above that it gets out of control. This is a difficult task to pull off. Enough inflation will suitably continue to inflate the stockmarkets although my sensible head tells me its super overvalued. The elevated P/E's make sense if interest rates are crawling in the dirt fractions over zero but as they rise it seems a big ask. A benign inflation scenario with rising rates/yields would warrant a major correction/collapse as the macro situation fundamentally changes but with inflation and rising rates I can foresee further market gains as weird as that sounds... furthermore the inflation would further degrade US Dollar FX crosses and weaken Index to sub 80 maybe sub 70 or even sub 60. I am serious. A rising 10yr US Treasury currently 2.841% is well above the 2.63% yield downtrend resistance line from 25 years running. This means bond bull is over. Bonds will fall and rates will rise back to centuries old levels around 5-6%.

Without inflation this would mean bonds fall equities fall and gold would likely rise but there would be contraction economically and Industrial metals would not thrive in that environment. For SCI the Gold and Silver would be share price supportive but not the rest of the metals.

With inflation this would mean bonds fall equities potentially continue to rise, gold would rise, US Dollar Index continues to fall, Industrial metals rise as economic activity ticks up and debt/gdp ratio improves. As yields and interest rates rise capital investment rises as companies and individuals look to lock in cheap long term interest rates before further increases. Copper will do well in this environment and Cobalt too as further investment will go in to modern uses for Cobalt in batteries etc... the banks do well as interest rates normalise. The hope is that the inflation supports house pricing sufficiently to warrant loan book values. If bonds can fall and interest rates normalise whilst supporting all other markets abd achieving the other goals the US will gave wriggled through what should have been the end of their economic dominance.

The main risk is the gold as discussed earlier and whether China and Russia take steps to use Gold as the basis of their new financial alternative system within Silk Road etc... there are unknowns like whether the US has secretly been mining gold and storing for decades and has created purposefully doubt to embolden its adverseries and to lure them in to challenging them only to show their final had if its ever really needed. I have to sebsibly consider this even though remote.

For SCI it looks a bright future as far as I can see. I think the US will try to engineer the best outcome and that means inflation weak dollar gold copper silver bull markets expansion and Industrial metal bull markets. SCI is equally well placed as a hedge bet with gold and silver in fear flight.

Essentially SCI is perfectly placed with its metal mix and is both a safety net with its precious metals and an inflation/expansion play and highly leveraged to boot to it.

Finally SCI has low market cap so cheap base to buy stock. Had low number of shares on book, has no debt in rate rising environment which can concern other companies, has highly intelligent and geology focused board with vast experience, has fabled ground to work in oldest established mining district, great available workforce, excellent strategic partner in CBH Resources on current 25% deal for Copper Blow with operational mills, had previous board member Professor Plimer advising Toho Zinc the parent company imof CBH Resources to help move things the right way and all his connections being a collegue of Gina Rinehart at her Hancock Prospecting and the $$$ flowing around her businesses and connections. To conclude the technicals are shaping up splendidly for SCI and the 100 week moving average is due to golden cross the 200 week moving average imminently which will be the first time in SCI's trading history.

Copper Blow is the fuse that will light countless projects and SCI has the opportunity to have a marvellous mix of precious base and technologically apprpriate metals for our time. Given a large enough IOCG deposit SCI may well be on track to become a major of the future.

I am serious and think I have a fair shot being right.

JFI

Expand

Thank you kindly JFI. Your analysis is very interesting and raises so many issues, both internationally, nationally and at SCI. I agree, increases in debt, inflation and interest rates will be challenges that have to handled well. We may see on Monday how resilient the share market is - firstly the ASX then the rest of the world, and finally in the US. My feeling is that the US sharemarket still has momentum at the moment and will rebound within the week. Any impacts on the share price of SCI and other smallcap miners, will be a test (but short lived, I hope). Yes, 2018 looks likely to be an interesting year in general. Thank you for your detailed response and insight.

(20min delay)
Last 0.6¢		Change 0.001(20.0%)		Mkt cap ! $7.945M

Open	High	Low	Value	Volume
0.5¢	0.6¢	0.5¢	$500	95K

No.	Vol.	Price($)
3	3341538	0.005
12	16388359	0.004
7	6282000	0.003
3	2950000	0.002
3	4300000	0.001

Price($)	Vol.	No.
0.006	6089023	7
0.007	1779087	2
0.008	600000	2
0.010	200000	1
0.020	2500000	1

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