RE: Commodity Analysts Believe the Party''''s OverI read Don Coxe's December 2007 Basic Points, and here is the one I like:
"Even if there is a global recession caused by global collapses
of subprime paper and LBO loans, it will not be deep enough to drive
base metal prices back to 2004 levels—but would be worrisome enough
to push further mine development even farther into the future."
In other words, a recession will postpone/delay new mine development. That means that exiting producers will do well, since much of the anticipated new supply will be delayed for years to come. Without new supply, existing supply will remain tight and base metals will retain healthy valuations. And as producers remain financially healthy in a recession, investor dollars will no doubt shift to them.
What does this mean for SWN? It likely means that SWN is now dead in the water as a development project (until prices get high enough to move forward with it), but that it will retain asset value that should appreciate (but only if Dr Paper stops diluting - which he can't - note that his last desperate attempt to raise cash was to give insiders millions of options in the $.20 zone. No doubt they will be exercising them to raise cash for SWN, and will get even more cheap options in the future. This will kill SWN stock, even though the resource is valuable.)