RE: RE: RE: RE: RE: Metal prices
I think there will be a lot more support on the downside. It would probably take an extreme event or economic downturn to get us back to bankruptcy levels below, say, 0.25, even if metal prices would fall much further. With new aggressive marketing, drill programs under way and financing secured for a whole year, there will be a certain degree of upward pressure no matter what (All of this was lacking when the price fell to bankruptcy territory a year ago). I believe the motivated equilibrium price is significantly higher now than just a few months ago, even with lower metal prices.
Also, we have to analyse what is causing the recently increased risk aversion in the markets:
1. Obama suggests increased banking regulations. This is no cause for long term fear, unlike the financial crisis where the effects and severity were largely unknown. The last thing Obama wants is to cause panic.
2. The Chinese government discusses interest rate increases to prevent an overheated economy. So in other words, the problem is not economic stagnation, the problem is that China grows TOO quickly. Again, government measures for these reasons is no cause for long term fear. And it is long term fear that make markets crash.
The point is, taking current factors into account, this to me looks like healthy and normal profit taking.