However looking at commodity price history it seems to me that Tin especially is still in the range that developed under strong US and China stimulus/money printing. And some others also. http://www.infomine.com/investment/metal-prices/tin/
So there is in my opinion likelihood of further commodity falls based on (actual) struggling US and European economies (as opposed to the official line trotted out in the US) and that China is reaching bubble bursting area and limits to further stimulus. Not sure how it stands with Tin supplies...but no doubt stocked as it did everything else.
Though China growth will still be clearly positive, maybe no longer on the same scale. SO I think there is a risk of commodity prices declining somewhat for a time, and possibly significantly for tin - though a weaker AUD would ameliorate that risk. AND China had some difficulty that would hit the AUD, and the RBA still thinks the dollar is still too strong.
Gold I am less concerned about as the price at present levels will be putting mines around the world out of business, in mothballs. I am not sure that they can manipulate gold below production costs for too long. (The reason for the gold suppression contained in minutes of a Kissinger meeting back in 1974.... not long after Nixon closed the gold window in 1971). It has been consistently attacked for the past 20 years and more.
But in more recent times we have massive buying by China...1,200 tons this year, and others. Demand is very strong, and Chinese own metal exchange set up may help over time to bring some reality back to the market....since is a physical only exchange. IF it were left to a free market then you would see a strong upside over the coming years. HOWEVER the central banks, Fed, bullion banks and BIS have the agenda to keep it down. So this is always a caution - to know what the have in mind, and how long they can keep it going. Harvey Organ estimates the gig will possibly blow up in December. (He is touted as a gold expert and has previously given evidence to Congress I think). The thing with the precious metals market is the Fed/BBanks could try to smash it even lower, or if they relent in the game, they would then rise back to their old highs. The good thing though is that often when they attack Gold the AUD also weakens with it.
The good thing about MLX is that there gold production costs are low, and they have forward sold for cash 30,000oz gold? For money in the bank, and probably a profit of $9m on that. Trouble with Tin prices may be able to be offset by gold operations for a time. And there gold projects coming online quickly would increase that cash flow.
They, I gather, can still delay their planned capital projects if commodity prices look too much of a risk, and go only with the gold projects. AND if worse comes to worse they can always offload or scale back, mothball etc the commodities sector to concentrate on gold....not palatable options or very likely - BUT at shows they at least they are in a position where they do have a number of options going forward to deal with market problems.
I kinda think that they are higher risk in the short term due to uncertainty of economies and commodity prices which look negative, if AUD remains as is. I think gold will strengthen by years end that will help offset any problems with commodities.
Medium to long term I think they look great, if they can come unscathed through some very tough times that may eventuate soon.
The other issue that I am watching before doing anything is Japan and the knock on effects of their 80trillion Yen printing decision. This is very big issue - very high risk stuff by them.....and the ripples need to watched carefully.
I want to buy into this company since I believe it has a strong future, but will wait to later in November to see how the global winds blow. Would then buy a good size package in my Superannuation fund, since they have a dividend and divi program. Might buy some with cash as well.
I wouldn't be surprised to see some more overt criminal gold manipulation games happen again since these guys have no shame.
All - IMHO
MLX Price at posting:
18.5¢ Sentiment: None Disclosure: Not Held
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