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September 7, 2008 Dear Friend, We reaffirm a strong bullish view of the nonferrous metals markets, especially concerning the large cap diversified mines, copper, nickel and gold shares. We expect a good portion of the world economy to continue to grow, and for the weaker nations to experience recoveries one year from now or sooner. We reiterate that 2008 global mine output for many metals has FALLEN and that potential surpluses seem limited to aluminum, steel or some steel ingredients like met coal. Over the past week the financial press has created unfounded fears about liquidiations of investment funds hurting metals shares or the stock market. Ospraie and Atticus Capital SEC filings show very minor holdings of metals shares, for example. We do believe the credit crunch, falling energy prices and investor withdrawals may cause PHYSICAL METALS DISHOARDING and commodities index fund withdrawals, and last week's large LME buildups in copper and nickel inventories may stem from actions of certain investment funds. We encourage our clients to step up and buy as this opportunity unfolds. We attach a discussion of the panic in metals markets and our regular weekend writeup with about one page devoted to each individual commodity. We stress that the American Metal Market cut its reference price for #1 bushelings in Chicago, the steel scrap Nucor uses for sheet price surcharges, to $570 from $850 per ton heralding in our opinion a drop towards $750 per ton hot-rolled sheet steel and a softer period for steelmakers. Faithfully, John C. Tumazos |
Copyright © 2008 John Tumazos Very Independent Research,
LLC
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