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The losers and losers - look at the carnage of the Latin American mines

Christopher Ecclestone's recent analysis of the effects of falling metal prices on the mining sector and the economies of major countries of Latin America.

The dramatic fall in prices of base metals may be one of two things. The first would be an end to the recovery that has reigned since 2002. The second was a temporary reaction to the liquidity crisis with a semblance of normality restored some but not all of the brilliance that base metals have experienced in recent years. We believe that recent years have not been "just an economic upcycle" in the product space, but rather that the upcycle finally exposed the years of under-investment in the mining area which has resulted in a strong imbalance supply and demand.

Metals are returned from the age before 1973 when they had real value. They are no longer the poor relations of the economic system. These are limited resources in a world of limited resources.

On the second point we agree that the liquidity crisis produced massive distress is at the heart groupies commodity most convinced. When push came to shove, the baby came out with the bath water (if we may mix our metaphors).

While some commentators have understood the Baltic Dry Goods Index as an indicator of impending disaster, we can not do much better in the base metals to look at the LME, however imperfect and these figures are manipulated. The key factor to note here is that stocks have not really been ballistic as in the past when there was a drop in demand. Then they moved up, and significant percentages of their low we will take note of zinc from a stock of three and a half days of global consumption to four days of global consumption, is ranked just as a flood of supply. Stocks are small compared to the "bad days". Some metals, like zinc and nickel is trading at "bad days" levels excluding stocks that reflects all proportion "collapse" of the application.

Call us conspiracy theorists, but the space of commodities has been one of the spaces are easy to rig prices send signals to the market. If you have a goal of pumping the dollar to produce a false sense of security when it should be plunging when it is easier to use the massive gold short CB gold stop for short or spending hundreds of billions to buy treasuries? In this case, they seemed to do both and it worked ... as long as it works. It is a task worthy of Sisyphus, of course, but indicative of despair PTB.

On the other hand, we have our old friends the Chinese are working metals prices for all they are worth. To purchase inexpensive metal (as they did in dumping rapidly in recent years)? No, buy cheap minors .. is even better. Kill the metal and mine owners will be deferred to the minimum pressure when the Chinese ( cnmining ) are waving a checkbook (and much thinner than was stirred at Peru Copper and Northern Peru Copper).

Believe current bad vibes from China as production slows considerably also imply that one must be piracy forecasts for growth in China of a "modest" 10% to negative territory. No one does, at least for all Chinese, if someone speaks with forked tongue here.

Thus, prices of metals have been on the ground between two millstones of two different sets of TBP.

LATIN AMERICAN MINING

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