It is widely accepted that hard commodity prices (metals, minerals and energy) move in long cycles. Each leg, up and down, lasting for 10 to 15 years. It is though that the up leg of the current cycle ended around 2013 and many say we are in the early stage…
Last month I concluded that the fall in the Baltic Dry Index was demand related. The oil price (Brent and West Texas Intermediate) suffered a similar precipitous decline over the same period. We have all read numerous theories on why the oil price has declined so much. Some examples: The…
For most of my professional life I have worked as a director of junior exploration/mining companies. The most difficult task, as director of a junior, is raising capital during a resource sector bear market. Brokers and investors have negligible interest in listening to your story. It is even worse if…
Two weeks ago I wrote that Australia was “overbanked”, which poses a risk to the economy. Last week the Bank for International Settlement (“BIS”) released a research report entitled “Why does Financial Sector Growth Crowd out real Economic Growth?” This report references an earlier research paper “Reassessing the Impact of…
Last week I wrote about the unhealthy dominance of banks in the Australian economy. In fact, the financial sector is almost half of the market capitalisation of all listed companies. There are other issues in the Australian economy that could prove exceedingly risky on the downside. Australia’s deficit as a…
There are five large listed companies in Australia. Four of them are banks and the fifth is BHP, one of the world’s largest mining companies. The financial sector amounts to around half of Australian stock market capitalisation. The vast majority of the sector is comprised of banks and “diversified” banks.…