MINDENAO GOLD MINING (fka MDGM)

[Alex Chory]

yep, gonna get better and better down the line...here's

a small article you'll certainly enjoy....

got you guys reading and reading and reading....

hehe

,,,,,$$$$$

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BUSINESS


Hedge fund hijinks play havoc with base metal prices
Kevin Andrusiak
February 11, 2006
HEDGE fund trading is playing havoc with base metal prices, making it difficult to calculate true values and making prices more susceptible to quick pull-backs.

Prices for many base metals are at, or near, record levels after spectacular rises this year.

But a decrease in prices, mainly by overseas investors taking profits, sent a shiver through the Australian share market this week.

"While recognising that fundamentals for base metals are strong, we remain of the view that current metal prices have been inflated by investment flows," Goldman Sachs JB Were analysts said yesterday.

"Our market contacts have reported a fresh rise in hedge fund activity, which we believe has also contributed to the recent price trend. Our concern is that we believe this type of investment to be much more readily reversible."


Most analysts believe base metal prices will remain high for the year.

Demand from emerging industrial nations like China and India is draining supplies worldwide.

Shortfalls in production are expected in zinc, copper and aluminium.

Lesser known commodities like molybdenum and zircon are also enjoying good price runs.

New mines for many base metal products, to make up much of the shortfall, are not expected to come on stream until 2007.

Simon Guzowski, an analyst at boutique investment firm Wise Owl, said this week's sell-off in commodity prices was due to a short-term pull-back by traders looking to cash in on profits.

"It has been interesting to see some commentators suggest that base metal prices have reached their peak for the year, which leads to the question, what really is driving the market," Mr Guzowski said.

"We are seeing strong demand from China and India continue, growing demand from Japan and Korea, supply disruptions, a soft US dollar, strengthening global economy and low inventories.

"Obviously a collapse in base metals is unlikely on the back of these fundamentals. However, the likelihood for further strong price gains is becoming less certain for the year ahead.

"Much of the recent rally in base metals can be linked to momentum-based fund flows that can't be confused with long-term players.

"Eventually these funds will lose their interest in commodities - which, when it happens, will drive prices lower."

http://www.theaustralian.news.com.au/common/story_page/0,5744,18106846%5E643,00.html