Tetlom, that is a very good question and something that most...

Tetlom,
that is a very good question and something that most investors never try to interpret. My opinion is that we are going to see periods of extreme volatility in the next 2-3 years. There will be sectors that will be in a bear trend and sectors that show itself as bull trends. The new normal is now towards making short term gains and the fear towards another double dip is still seething deep inside although the volatility index is way under.

In the base metal sector, i feel that we are going to see a rally till March 2011 before a minor correction. This is, of course, a healthy scenario if it happens. We should then have a sideways movement before moving into another rally towards the end of the next year. The US government will not allow the share market to drop with an election beckoning in 2012. China, on the other hand, has been quietly moving their cash reserves into tangible assets such as gold, silver, base metals and natural resources. The pace has been relentless...over here in Singapore, i have been told that the Chinese government had been instructing their state owned enterprises and mid-tier businesses to make purchases of land since 2008 and thus ensure that adequate reserves are in place for their burgeoning population. The M&A activity here is buzzing.

China is probably only 25% on the way to becoming the next economic powerhouse. Their military spending has also increased and there are numerous domestic major infrastructure projects in the pipeline. They are now in a dogfight with Japan, South Korea and India in trying to secure supplies. Their focus is also now shifting inwards towards catering to an ever increasing middle class as well as a huge migration pattern of locals from the rural sector to the urban sectors. Base metals are going to be strong towards 2012/13 as i do not see the pace of their move slowing down.

One has to realise that this is a fundamental shift that started from 1998...the economic tremors of a move from the western base to the eastern base. The sooner investors understand this, the more rewarding their outcomes will be, in my opinion. America, in it's move as a global poqerhouse after the second world war had periods of major corrections and black swan events...China will have these periods too. It will be no different....China and the sleeping Tiger [i.e. India] are the new giants of the world economy.

I see zinc at 1.50/lb when OVR hits their Mine Permitting stage. That will be 50% more to add to their new NPVs that are due to come out in this quarter. By the looks of the recent changes in the buys vs sells, it does look like some savvy investors are in agreement with me. However, i do recommend that investors understand their risk vs rewards and not put all their eggs in one basket. OVR is a development stage opportunity and although i do have a great number of shares in this firm, it only constitutes 20% of my overall position in the Australian market.

Please be wise in your allocations.