EEM (Emerging Market Index)38.77 +.01 EWZ (Brazil)64.97 -.68 FXI (China Index)40.11 -.6
TLT (LT US Bonds)960.91 -.50 IEF (7-10 yr US Bonds)93.32 -.08
GDX(Gold Miners)49.90 -.89 IYR (Real estate)51.17 +.06 (XLF Financials)14.45 -.06 XLE (Oil) 54.04 -.28 XLB (Materials)30.37 -.30 XRT (Retail)40.17 -.42 XLK (Tech) 21.70 -.04 XLV (Health care)29.28 +.12 XHB (Homebuilders)16.23 +.11
Investors shouldn't get too excited about the trove of mineral treasures found in Afghanistan. Experts say it could take at least a decade before the discovery yields anything in the marketplace.
Though the future potential is extreme, the immediate impact of the mother lode in iron, copper, gold, cobalt, niobium and lithium likely will be nil.
A host of logistical, political and and geographical barriers must be dealt with first.
"This is huge news. It's the kind of thing that can have an impact on psychology today and may have an impact on psychology tomorrow," says Dennis Gartman, who manages a hedge fund and edits the daily Gartman Letter. "But it's a mining project. That's 10 years in the future."
Early estimates for the discovery, disclosed by the New York Times, are about $1 trillion.
Such a level surely would be enough to impact world markets and set off geopolitical battles over who will get to mine the rich deposits. But the extent to which it actually impacts prices and the broader Afghanistan economy isn't even close to being determined.
"The United States and China will find themselves butting heads their often," Gartman says. "They're both going to try to influence any government that exists there."
Indeed, there's also the complicated governing structure in the country, in which President Hamid Karzai's government holds a tenuous grip over national affairs while the Taliban is a continuous disruptive force.
"There are some pretty big issues given Afghanistan's land and infrastructure," says Philip Silverman, managing partner and chief trader at Kingsview Management, a commodities trading advisory firm in New York. "It's certainly going to complicate the situation in Afghanistan, with the Taliban and the world."
Investors should watch how the contracts are awarded and any signs of development in Afghanistan that could accompany the find.
Getting the goods to market while overcoming the country's primitive mining system will be among the key challenges, Silverman says.
Find Could Be Worth $1 Trillion Europe Troubles to Intensify: RossGartman 'Appalled' by Spill Reaction
"We would be looking to see when they start talking to some of the private industries and seeing how they would be looking to bring them in, and closely looking at what's going on in the military conflict," he adds. "One trillion dollars worth of minerals below the ground could certainly embolden the Taliban to a place where it might not calm things down. It might layer a whole new set of problems on the situation."
I thought we were trying to find Osama. It turns out they are the Saudi Arabia of Lithium...you know batteries for your cell phone. SANTA MARIA !!! Well at least I know what are troops are fighting for.....Blackerries.
I love this story because it is the perfect cover story to take Gold down because if they do it now everyone will say that the price move was an over reaction. The truth is Gold is ready to dive.
Some Charts
Homebuilders: No gain from August of last year After all those tax credits
GDX Goldminers No gain since October of 2009 After all the Gold hype
XLF Financials Same price as August of 2009 after the TARP was paid back
Mikey
No comments:
Post a Comment