re: volume I think fridays volume may have shown that the selling into stupid cheap levels may be over. No buying either but at least selling into ridiculous cheap prices was not there.
I still am of the opinion that the traders in the metals markets have taken the price of zinc down too far given the fact that the levels in storage at the LME are at almost all time lows. The last time the price of zinc was at this price inventories at the LME were significantly higher, almost double or triple from what they are currently. The price of zinc has fallen losing half of its value from its peak of almost 2.00 just recently with no rise in LME inventory levels. The rest of the base metals have not had that much of a drop. A correction yes but not a complete wipeout. I cannot believe that with the current supply situation and the current price of zinc, producers will have the ability to build up the supply levels to where they were.
What is being forecast by the analysts and the Goldman Sachs and Merril Lynch,s of the world is simply not in the cards as there are producers now who either will not get started or funded, or producers who just recently started up after a long hiatus only to have to shut down again only after a brief 6 months in operation. ADA and BN are perfect examples of this dilemna as well as TAM. ADA and BN, Acadian and Blue Note, are mines in eastern Canada who have been recently recommisioned after being on care and maintenance and have been funded for there startups using 1.50 lb. zinc as a model for there forecasts of cash flow and profit potential. TAM has a similar situation and has used 1.49 lb. zinc in its feasability models. ADA and BN would have never have gotten off the ground and went into production with zinc only at 1.00 lb. and there are currently projects like TAM that are in the same boat. You can multiply that worldwide and see that 1.00 lb. zinc has the effect of putting the whole industry of zinc production and exploration to almost a complete stop. And this will drive up inventory levels so the price of zinc will collapse, as if it has not allready.
I still see this whole selloff in the price of zinc as a product of a market that is too preocuppied and focused on the U.S economic situation and hot money and speculators driving the price of zinc far too low. There have been wild price swings lately in currencies and metals markets, lots of volatility with quick changes in values. The current price of zinc is far too low for producers to make any money and justify the explosion in inventories that is being forecast. Projects being put on ice and recent startups going broke before they even had a chance to get off the ground does not make any sense. Especially given the fact that the rest of the base metal miners are not facing the same situation currently as zinc producers. Why the preoccupation with zinc. CHIMO>