Liberty and the Nickel priceI am pasting this post and a follow up post here; it involves an excahnge on the ISM forum, but as it relates to the Ni price, and LBE, it may be of interest here.
whaler,
You take issue with my statement that the the effect of daily or monthly fluctuations in Ni prices on ISM prospects is infinitesimal, whereas current price fluctuations could have an almost immediate impact on producers like LBE. To support your position, you refer to a five year chart. I have no problem with referring to history to get an idea of inter relationships that may be repeated. The five year charts illustrate very clearly, the share price reactions in ISM and LBE related to the huge spike in nickel prices, and the subsequent collapse in share prices related to the collapse in both nickel prices and the global economy.
However, you have chosen not to overlay the charts, and in so doing, you miss showing an illustration that supports my contention. You see, was referring to ISM reaction to nickel prices as related to producers, specifically LBE. There was a similarity between ISM and LBE (and some other companies) that existed prior to the Ni price spike and during the Ni price collapse, that doesn't exist today. During the period of your five charts, the dynamics of the companies changed. Certain companies changed from being explorers only, to explorers and producers. Some companies became larger producers. ISM closed out classed by you I believe as a late stage explorer, by others as an explorer that had failed to show that its major property had economic potential. Some would say, that there are clues that ISM showed its major property
has not got significant economic potential. Regardless, the point is that the dynamics of the companies changed.
If you are going to use historical charts to show relationships since the dynamics changed, the five year chart is deceptive. Its difficult to pinpoint exactly when the change in particular companies occurred. However as we're debating how Ni price might impact share price, we know when Ni price bottomed out and began its recovery, lets have a look at this factual information and see how it affected share prices. I am very much aware of this, because as I have said, I gambled on the Ni recovery by taking a position in a "basket" of TSX Ni companies - including ISM on the basis that while not a producer it was overdue in releasing a much ballyhooed NI43-101 economic analysis.
Without posting or linking charts, anyone invested in nickel companies knows the low point was in the late 08 to early 09 timeframe, the recovery commencing about one year ago. Your five year charts include that period, but not being overlaid, and with confusion of irrelevant starting points, interpretation is difficult. the fact is, that out of the four TSX companies I refer to, ISM is the only one that has not had a positive share price movement. I don't pretend to say that Ni price is the only factor, but I suggest that it is a factor. I also suggest that the public's perception of the companies' prospects in nickel mining is a factor - as with the exception of FNX, Ni is what they had tied their future to.
So back to the charts, whaler. This time overlaid covering a period when the Ni price moved from approximately $6 to the $12 range.
I believe there are other considerations that support my contention, but I'll cover those in another post