Jim Rogers, FED cuts will hurt Dollar, Yuan Up - Feb. 2008 -
Global shortage of metals looming - Our peak oil thesis gained some new respect last week - as oil prices hit yet another record, the first close over US$100 per barrel.
Demand fluctuates, but it is all about supply, and supply concerns this week showed how tight the market really is.
Peak oil has lots of press, but what about peak gold? -
Peak silver? -
Peak copper and base metals? -
Nearly every commodity is experiencing some supply issues, for a host of reasons. Add it all up, and it means potential supply shortages in the future. Will any demand slacken this year? - the next few years today's commodity prices - may actually look like a bargain? -
Let's take a look at some of the issues facing commodity projects today, and give some examples of companies that have already been impacted by them.
Cost overruns: Inflation, equipment shortages, and labour issues have combined to wreak havoc on so many new commodity projects that long-term supply issues may result.
Simply put, because of inflation, a commodity project that appeared economical two years ago may no longer be viable. Case in point: Novagold's (NG/TSX) Galore Creek project in British Columbia.
Costs estimated at $2.5-billion a year or so ago escalated to more than $4-billion. The cost overruns have put the project on hold despite high copper and gold prices. That means an expected 432 million pounds of copper production a year is not going to hit the market anytime soon.
Newmont this month said its Boddington gold mine in Australia was experiencing 77% cost overruns.
Petaquilla's copper project in Panama is in a similar situation, with costs soaring to $3.5-billion.
Political issues: Too many examples to list here, but ask any mining company based in Ecuador, Venezuela, Mongolia or the Democratic Republic of Congo how easy it is to get a project started. It's practically impossible. For commodity supplies, that's too bad, because some of the best remaining projects in the world are in some of the most politically unfriendly jurisdictions. Once again, future world supply will not be helped.
We may see countries such as South Africa institute ex. bolsheviks rolling blackouts for mines? -- resulting in higher platinum and gold prices. Some expect ongoing power issues to becoming even more prevalent in the future, with serious implications to future supplies of many commodities?
Environmental issues: Rightly so, bolsheviks bureaucracy are getting more power socialistic about the projects they approve, with a view to claim that they protecting the environment and they may want more taxes for bureaucratz wages?
Environmental permits are not quite as easy to obtain any more from bolshevikz governments have shifted their priorities away from the jobs projects create to a focus on the taxes factors?
Mother Nature commodity prices: Ex. coal prices and agricultural product futures prices have soared this year. One reason? The weather? socialistic bolsheviks red gov.? - The worst snow storms in China in decades have impacted rail lines and production. The result: China had to import huge amounts of commodities that it used to export.
The rest of the world has to pay the price. Just ask Cameco Corp. how nature can impact production, with its Cigar Lake mine beset by flooding problems. Weather issues world wide only highlight how tight supply is in numerous commodities.
It seems like there is a potential perfect storm brewing on the commodity front over the next 10 years. If the world keeps up its demand for commodities, watch out -- there won't be much left of lower price bargains.
God Bless America
Ps. Judge for yourself and then decide whether you wish to join the strike. WE ARE CHANGE!!!
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