Resource Market Weekly Recap – Dec 3, 2009

- December 3rd, 2009

By Melissa Pistilli-Exclusive to Resource Investing News Gold Investing News News from Dubai that two state-owned firms are delaying repayment of $60 billion in foreign debt sent markets around the world reeling last Friday.  There were fears that this could possibly signal another lead into a new world recession, which sent stocks plummeting especially in … Continued

By Melissa Pistilli-Exclusive to Resource Investing News

Gold Investing News

News from Dubai that two state-owned firms are delaying repayment of $60 billion in foreign debt sent markets around the world reeling last Friday.  There were fears that this could possibly signal another lead into a new world recession, which sent stocks plummeting especially in the UK, where most of the debt has been bank rolled.

Gold fell 5 per cent on Friday after the news sent investors scrambling to cover losses in equities and other commodities. Silver, oil and the base metals also suffered losses.

Word has come from Abu Dhabi, capital of the United Arab Emirates, that it’s willing to help out Dubai with its debts, which has helped to ease some of the first initial shock to the financial community.

Gold’s plunge was clearly short lived; by Tuesday the yellow metal had broken over the $1200 level to close at $1210 an ounce, and has been holding steady all week.

Clearly, the gold bull is still bucking. A correction in gold was expected despite the bad news out of Dubai, which has now been characterized as little more than a “knee-jerk response.” The market actually held up extremely well owing to strong fundamentals that are expected to continue as demand from central banks, an ailing dollar and inflation fears remain in play.

Lithium Investing News

Several automakers are announcing new electric vehicles rolling of the assembly-line in the next few years, including many using lithium-ion battery technology.

Sanyo Electric plans to begin supplying Li-ion batteries to automakers in the second half of 2011 and predicts global sales of hybrid cars using Li-ion to grow to 2.3 million units by 2015 and 10.2 million by 2020. The company already supplies nickel-metal hydride batteries to Honda and Ford, and also plans to supply Li-ion batteries to Volkswagen soon.

Porsche claims it will be the first car maker in the world to offer a starter battery using Li-ion technology. Toyota is also on track to offer hybrid vehicles with Lithium-ion batteries.

Chevrolet has announced that the Volt electric vehicle will be available in California next year. It is also partnering with three California utilities and the Electric Power Research Institute, as part of a demonstration and research program, to introduce customers to electric vehicles.

Li-ion batteries are reported to have a storage capacity of 150 watt-hours per kilogram compared to nickel-metal hydride with a typical storage capacity of 70 watt-hours per kilogram and lead-acid batteries at 25 watt-hours per kilogram.

Investing in lithium-ion auto battery manufacturers seems the way to go at the moment. The auto industry looks set to be a big customer upping demand in the coming years as batteries replace combustion engines.

Silver Investing News

Silver suffered a slight setback on Friday pushed down by news out of Dubai that some state-owned firms might default on close to $60 billion in foreign loans. Investors sold off precious metals to cover their losses in equities and other commodities.

Silver hit a two-week low of $17.66 Friday, but bounced back Monday to close at $18.47 and managed to break past $19 an ounce later in the week.

Gold is still silver’s best friend as its long-term fundamentals remain strong. A faltering dollar, inflation fears and growing demand from central banks are pushing gold higher and bringing silver along for the ride. Many analysts say it won’t be long before the white metal is testing the $20 level.

While the main driver behind silver prices for now is investment demand, silver is also expected to benefit from rising industrial demand which is forecasted to increase “sharply” in 2010.

Uranium Investing News

The hailstorm of political risk brewing for Khan Resources in Mongolia has finally come to a head this week, with Russia’s state-owned uranium producer ARMZ putting up a hostile takeover bid for the Canadian miner. ARMZ, the world’s fifth largest uranium producer, has made an all-cash offer valued at C$35.1 million or 65 cents per share.

Khan holds 58 per cent of the Dornod Uranium Property. The remainder is held by Priargunsky, a subsidiary of ARMZ (21 per cent) and the Mongolian government (21 per cent).

ARMZ and Khan have been in a Mexican standoff over the exploration rights to the uranium-abundant Dornod deposit in northeastern Mongolia for some time now. Moscow is using Mongolia’s struggling economic situation and its dependence upon Russian financial aide to get its hands on Mongolia’s abundant resources, including its uranium deposits.

Khan Resources has become a victim of Russia’s designs for dominance in the world’s uranium and nuclear markets. If Russia can gain control over Mongolia’s uranium resources, combined with its current holdings, Moscow would have control of nearly half the world’s uranium enrichment market.

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4 responses to “Resource Market Weekly Recap – Dec 3, 2009

  1. Considered investing in Khan Resources early last year but hesitated because of the political risk that is now asserting itself and this is a good lesson on risk management involving other stocks that have good resources in politically risky areas!

    Lithium batteries may well be the immediate rage but it may be short lived, from what I have read the up and coming thing is VANADIUM which has a far better longevity than even lithium. Subaru will probably be FIRST off the block with a combination lithium/vanadium battery powered electric vehicle.

    Vanadium may also hold the solution to POWER STORAGE that may make solar and wind power competitive with more conventional sources of electricity by enabling the STORAGE of electricity produced when the sun is shining or the wind is blowing, thus stretching out the availability more evenly!

  2. Considered investing in Khan Resources early last year but hesitated because of the political risk that is now asserting itself and this is a good lesson on risk management involving other stocks that have good resources in politically risky areas!

    Lithium batteries may well be the immediate rage but it may be short lived, from what I have read the up and coming thing is VANADIUM which has a far better longevity than even lithium. Subaru will probably be FIRST off the block with a combination lithium/vanadium battery powered electric vehicle.

    Vanadium may also hold the solution to POWER STORAGE that may make solar and wind power competitive with more conventional sources of electricity by enabling the STORAGE of electricity produced when the sun is shining or the wind is blowing, thus stretching out the availability more evenly!

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