Good afternoon
a weak Yuan, and a massive rise in copper stocks on the LME are driving copper lower today, and drag - to a lesser extent - the other base metals with them.
Yellen´s comments suggest, that interest rate increases should most probably not be expected any time this summer - maybe in September - maybe never???? She is citing the US labor market, risks in the Chinese economy, and a possible BREXIT as risks to the world economy.
Iron ore and Steel Rebar had another strong day in China overnight, while oil looks like closing above 50$ for WTI for the first time since Nov 2015. More production losses in Nigeria are helping - but I believe, that the air is getting thin now....at 50$, some shale producers might start pumping again. For the banks, this should provide them for some breathing space in their energy-lending portfolios.
The relatively strong demand for steel in China, alongside with the PMI bubbling along just above 50, might indicate some ongoing strength of the Chinese economy - at least relative to some pretty bearish expectations.
The Australian$ is very strong today - it jumped following some RBA-comments , indicating some reluctance to cut interest rates any further. While gold is holding quite nicely just above 1240 US$/oz, in A$ terms, we are not looking that flash at 1666 A$/oz. In light of some very strong runs for Australian gold producers, I think one should be a bit cautious at these levels...it never hurts to take a few profits here and there.
Lundin Mining seems to be giving the green light to the development of the large Fruta del Norte gold deposit in Ecuador. This is a big change for Ecuador, which over the last years, has been one of the best hated countries for mine development.
Copper production in Peru, driven by new projects, is growing strongly. Not unexpected, but certainly a negative for copper. Production is set to double from 2011 to next year - catapulting the country to being the second largest copper producer behind Chile only. For zinc, things are looking a lot better - production is down by 9.1% this year so far, which is signifciant, as Peru is also the second largest zinc producer in the world. More bull market amunition for zinc! Demand for small zinc stocks continued unabated last night.
Oceana Gold have released an update on their 30 Mill US$ exploration program. Very good results from their NZ assets Waihi and McCraes, as well as from Haile, with a number of very impressive intersections. Good to see, that their exploration push is paying off - sucecsfull exploration is still the best value add! The only area missing any significant results seems to be the Philippines around Didipio - exploration is at an earlier stage here, but a large drilling program has now started here as well.
Have a nice eveing
WS
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