Global governments' growing dominance in base meta
BMO Capital Market's global markets advisor Don Coxe says he expects "to boost our recommended exposure to the base metals sharply this year, as our concerns about a double-dip US economy fade."
Dorothy Kosich
22 Feb 2010
Full story here. Salient points:
However, in his latest
Basic Points analysis,
Hard Rocks and Hard Shocks, Coxe fears
governments and sovereign wealth funds could eventually control the base metals industry unless investor attitude change.
Coxe also observed that known e
conomic reserves in politically secure regions have not increased, despite heavy capex in recent years. "Costs of finding, developing and producing are up sharply; which means the small and mid-cap entrepreneurial companies that in early booms supplied substantial new production (either by themselves or through being taken out by majors) have not been able to fill those roles to the same extent this time."
Coxe suggested, "Perhaps the best place for mining in North America is Nevada because the local governments are friendly and Congress has been unable-despite decades of effort to come up with a royalty scheme for federal lands."
"Result: companies only pay regular corporate taxes," he noted.
In his analysis, Coxe asserted that base metals and coal are the purest "Chindia" plays among the four commodity asset classes (base metals and coal, precious metals, energy, and agriculture)."
He also suggested "base metals may well have the best upside potential of any group when-or if-overall global economic growth resumes and investors no longer have reason to worry about metal price bubbles."