July 13th, 2016
Nick Kelso’s Rats Rant – July Edition
My name is Nick Kelso and I have been a stockbroker for the last 10 years, I am not a resource analyst by any stretch of the imagination but have learnt a few things about resources over my short stockbroking career.
I have been kindly asked to put a few paragraphs together for Regal to try and hopefully inform and maybe educate you on what I think is hot in the Resource space.
Many of you that are receiving this report probably know a lot more about resources than I do but different opinions are what makes the world go around and let’s face it if we knew what share prices, commodity prices or even horses running on Saturday were going to do, then don’t know about you but I wouldn’t be working !!!
In my opinion the hottest commodity on the market today would be Gold, reason I say that is everyone can relate to it because they actually know what it is, unlike some other commodities I will mention below.
Gold
The Gold price today is currently $1,367 US dollars but in Aussie Dollar equivalent it has just broken through $1,800 AUD, which has been great for the Gold producers of the market, think NCM, EVN, NST, RMS and the list goes on.
In my opinion the demand for gold continues to grow in Asia and some sideshow issues have influenced some Western players to build up their holdings in Gold ETFs again. All good news that will become even more important when the world better appreciates just how tight inventories of available physical gold are nowadays.
If everyone that held Gold on paper was to call for the physical Gold to be delivered I would imagine there wouldn’t be enough physical Gold in this world to deliver it.
Conclusion: Gold continues to head north
Silver
Silver has been rising nicely recently and has outperformed the strong gold price by about 20% in 2016 after lagging behind it’s bigger and sexier brother (Gold that is). Silver is the poor man’s Gold as some would call it but in my opinion silver’s time may yet be still to come.
Keep watching this space and don’t be surprised to see Silver edging closer to $30 rather than the $20 odd that it is trading at today.
Conclusion: Silver continues to head North, maybe even quicker than the sexier big brother (Gold)
London Metal Exchange commodities
The Zinc, Copper, Nickel, Tin, Aluminium and Lead prices have all been trending higher over the last few months, there are various reasons for this depending on the commodity and I don’t know the reason for each commodity but what I can tell you is the reason the Zinc price has been moving North is because the largest open cut Zinc mine in Australia (Century mine) has recently closed down.
Believe it or not this puts pressure on supply and with no major zinc mines coming online to offset this shortage it makes me think the Zinc price also continues to head North.
The Nickel price also has been heading North and one of I dare say many reasons for this is because there has been political and media speculation that with the new government in the Philippines, it may introduce a ban on the shipping of nickel ore, further limiting the supply available to China, the world’s largest consumer of nickel ore.
The new In Vouge commodities (that’s what I call them anyway)
Lithium
If you asked the average stockbroker (like me) 3 or 4 years ago what is Lithium and what is it used for chances are they would have had no idea but given Lithium is probably the hottest commodity on the market right now ask those same brokers today and they will be able to rattle of much more than what they did 3 or 4 years ago.
Lithium is a soft, silver-white metal belonging to the alkali metal group of chemical elements, like all alkali metals, lithium is highly reactive and flammable and for this reason it is typically stored in Mineral Oil.
Because of its high reactivity, lithium never occurs freely in nature, and instead, appears only in compounds, which are usually ionic.
Lithium occurs in a number of pegmatitic minerals, but due to its solubility as an ion, it is present in ocean water and is commonly obtained from brines and clays.
On a commercial scale, lithium is isolated electrolytically from a mixture of lithium chloride and potassium chloride.
The above would sound Chinese to the average punter, certainly did to me when I first read it but if you had seen the share price gains in some of these Lithium stocks that are currently on the market you too would want to know more about this In Vouge commodity.
PLS 2c to 65c
PSC 1.4c – 5.3c in just over 1.5 months
BGS 7c start of the year 32c today
GXY 3.2c a year ago 51c today
Plus many more, please be aware I did recently help place stock in PSC, hopefully they have further to run for my sake and the clients that have any left !!!
Graphite
I won’t bore you with a long and boring description on what Graphite is and what it is used for but what I will tell you is that Graphite is second only to Lithium at the moment as the Hot commodity on the stock market.
Graphite was In Vogue around 18 months ago and then fell off the radar with the rest of the commodities during the so called resources bust.
It has since come back to being in favour again and many listed companies with Graphite exposure have too had a stellar run recently.
MNS 40c start of the year 90c today been as high as $1.12
BKT 3.5c start of the year been as high as 15c today
HXG 6c start of the year been as high as 16c today
I dare say there are much better examples of better performing Lithium and Graphite stocks but this is to try and give you an idea of how really In Vouge these niche commodities are at the moment, not sure how long they will stay In Vouge but as one of my first boss’s taught me when I was working at a big stock broking house “the trend is your friend son”
Hopefully you have enjoyed this short and spiel on the commodity market and as I said I am a broker not a commodity analyst, so if you are looking for something more technical then suggest you call your broker and ask to speak to the analyst and see if what he says to you sounds Chinese also !!!
I write a daily market wrap called rat’s rant (long story behind that one) and if you would like to receive this free email each day feel free to email me and request to be added to the list !!!
The above is all just my opinion and in no way should this be viewed as advice, if you would like to know more about anything above please consult your financial adviser, whether that be a stockbroker, financial planner, your wife or your husband !!!
Regards,
Nick Kelso
