Mining will keep economy growing Need to increase production Prices may fall but demand will be strong

 

THE mining boom will help keep Australia’s economy from falling into a hole until at least 2013, a report suggests.

Economic forecaster BIS Shrapnel said record levels of mining investment together with a ramp-up in production will insulate the economy from recession for the next five years - even with commodity prices tipped to fall.

“We didn’t really do enough investment, with the benefit of hindsight, through the 1990s to gear ourselves up for maintaining strong growth in mineral output and what we’re trying to do now is catch up,” said Adrian Hart, senior manager of BIS Shrapnel’s mining unit.

“The next five years will all be about increasing production to meet demand from China and other emerging economies . . . and once that production comes on stream that will drive weaker prices for a lot of commodities.”

The

...

Financial NewsJason Corcoran in Moscow23 June 2008 Investment climate is steady as new leader continues reform agenda Russia’s equity markets are enjoying the country’s honeymoon period under its new leadership, but investors remain wary of how the power-sharing arrangement will evolve.The changing of the guard on May 7 saw Vladimir Putin hand over the presidential mantle to his protégé Dmitry Medvedev. Within hours, Medvedev had nominated his mentor Putin as Prime Minister.The smooth choreography proved to be a fillip for Russia’s main stock markets and sparked a buying spree by foreign funds.The MSCI Russia Index was the best performing emerging equity market last month, rising 15.7%, and outperforming the MSCI EM Emea index, which rose 7.3% in the same month. Inflows recorded in the third week of May of $542m (€350m) were the highest in Russia ...

Fortune asks - is it too late to invest in commodities? We’ve touched on this theme many times in the blog [Mar 22: Alert - Commodities are Dead] and my thesis is we’ll have a long term upward move as too many humans want to live like Americans (”World of Shortages”), but it will be punctuated by moves (sometimes viciously) downward from time to time due to various factors. The most common one over the past year is the “strong dollar” myth. Another could be “China will implode post Olympics” or “crude is heading back to $60″ or any number of reasons. Most of it is nonsense; unless the globe goes back to 90% of people living in abject poverty we are headed down this path, one way or the other. And Americans, ill prepared and still in denial, will be competing with …

Market Vectors Russia (RSX) and Coal (KOL) remain 1-2 in this week’s sector ratings, although the order has switched. Both sectors have strength ratings over 100, indicating that they are expected to perform in the top 2% of historical ETF returns over the next month. (We have been showing the results of our sector model each week with a one-day delay. Investors interested in more details can request a free report via email — found at the top left of the page).

A Look at the Fundamentals…

The Market Vectors Russia ETF is a closet energy play, with nearly 40% exposure. Tom Lydon at ETFtrends has a nice article on the relationship between Germany and Russia, leading to more modernization. This has helped the RSX ETF.

When one wants foreign exposure, the ETF is often preferable to finding individual stocks.

On the coal front, Tom Lydon has another …

First let me preface this entire entry by saying, I don't bemoan the type of work firefighters or police officers do - along with coal miners these are among the toughest jobs in America. That said, I wrote a piece on the bankruptcy in Vallejo [May 7: Vallejo California Votes for Bankruptcy]; Mish over at Mish's Global Economic Trend blog followed up Thursday with a look at the salaries of public workers in the city. He took a look at all the workers who made more than $100K - there were 292 city workers (I don't know out of how many) - but this is only a town of 100K people. Not New York City. Below are charts of the $200-$299K and $180-$199K ranges. Dominated by firefighters (and some policemen). Again, I have no bones with these people being compensated for tough work but ...

I am doing about 2 weeks worth of transactions in 1 day... exhausting. Just to avoid being a pig I am taking down my Cummins Engine (CMI) by 1/3rd. I restarted this position April 18 as a weak dollar, undervalued US multinational [Apr 18: Restarting Cummins Engine as the Rest of the World Moves on Without USA] in the $53s. I am now looking back at old holdings that are industrial in nature and am going back to Cummins Engine (CMI) - which has great exposure to India and China. This was a previous fund position, that I closed in November [Nov 13: Closing Cummins Engine] correctly anticipating a selloff and weak period for these type of names. Since then, on April 30th it reported excellent earnings [Apr 30: Cummins Engine Excellent Report on Strong International Sales] at which point I sold 200 of my 500 shares in ...

This move has nothing to do with the fundamentals of gold or silver. Simply put I want to run a concentrated portfolio and my # of holdings is getting too large. With the Federal Reserve backstopping the entire US financial system, the risk of "calamity" is lessened (in return for inflationary pressure and dollar destruction)... but this is more along the lines of, I see no reason to hold gold/silver when I have coal/fertilizer. I already know where the prices of those are a year out - whereas gold is speculative, subject to the whims of the market, and a lot of people believing in a fantasy called "2nd half recovery". So I just don't see the need anymore to hold something that is sort of replicated in other ways in the fund; yet carries more risk. I'd rather simply be more ...