Base Metals Demand is Strong

It’s gambler’s world out there. “Galaxy Resources share up 70% on debut,” we read mid-morning. “Galaxy Resources, a minerals company targeting a suite of commodities, has debuted on the Australian exchange at a significant premium.) The company is “targeting” the base and precious metals market, including tantalum, uranium, and iron ore.

With the caveat that we know nothing about the quality of its properties, we’d submit this share performance has more to do with investment demand for metals shares than economic demand for base metals. In other words, yes, base metals demand is strong. And with copper’s 40% correction from its high last year, it’s possible the base metals market has fully corrected. But you still can’t just buy any old share without knowing more about management. Well, you can do this of course. We just wouldn’t advise it. Sooner or later it’ll cost you, whether you’re a billion fund or a stay-at-home trader.

For right now though, according to the informal poll on our website, about sixty percent of respondents say they are better off now than they were two years ago. Does this mean they are richer? Make more per hour? Have a bigger house? Or just feel better? We don’t know. We didn’t ask. The official statistics show that with unemployment low, wage growth is surprisingly stagnant. People are working more, and making about the same, or less when you include inflation.

The visible signs of wealth, though, are also a kind of dividend on investments in “soft infrastructure.” When you are surrounded by wealth, you can’t help but feel a little richer, even if it doesn’t lower your mortgage payment. Unfortunately, feelings change, mortgage payments don’t.

Dan Denning

Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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