WEEKEND UPDATE

- September 1st, 2008

By Dave Brown – Exclusive to Resource Investing News Resources investors will be carefully monitoring news developments on at least two fronts this week, what with a concentration of interest in the progress of tropical storm/hurricane ‘Gustav’, in addition to the recent Russian foreign diplomatic relations with its neighbors and the West. Oil prices should … Continued

Checkered past in diplomacy

By Dave Brown – Exclusive to Resource Investing News

Resources investors will be carefully monitoring news developments on at least two fronts this week, what with a concentration of interest in the progress of tropical storm/hurricane ‘Gustav’, in addition to the recent Russian foreign diplomatic relations with its neighbors and the West.

Oil prices should experience upside pressure this week as the weather system labeled ‘Gustav’, threatens to impair US oil refining and natural-gas production more strongly than the two previous hurricanes ‘Katrina’ and ‘Rita’ did three years ago. Andy Lipow, President of Lipow Oil Associates LLC, said, “The big question for the market is going to be how quickly after ‘Gustav’ passes will the industry be able to recover and get back online.”

On Monday, EU leaders are scheduled to meet and draft a response to Moscow’s actions in Georgia. According to Reuters, Russia does not desire a conflict with the West but will retaliate if attacked. In an interview to Russian media on Sunday, Kremlin leader Dmitry Medvedev said, “Russia does not want confrontation with any country. Russia does not plan to isolate itself. Russia will develop, as far as possible, its relations with Europe, with the United States of America, and with other countries”. There is no doubt that an escalation in tension will stimulate activity on the both the commodities futures markets in addition to the equity markets for resources investors.

Potash: “Pot of Gold” at the end of the rainbow for investors

Potash Corp. (TSX: POT) management decided last week to re-open its Allan mine, the largest of the three company’s mines that have been closed since August 7 due to a workers’ strike. The company is still unsure as to whether the 500 striking workers will have an effect on its ability to meet sales commitments, said spokesman Bill Johnson in an interview with Reuters.

Molybdenum: Gearing up to expand Chilean operations

Last week, Los Andes Copper (TSX-V: LA) announced the completion of a private placement for US$7.5 million, resulting from the proceeds of 15,000,000 units sold at a price of US$0.50 per unit. This capital will be used to develop a low strip, open pit operation in an area of low elevation with excellent infrastructure in Chile. The Vizcachitas deposit occurs in the same metallogenic belt as the large copper-molybdenum porphyries of Rio Blanco-Los Bronces, Los Pelambres-El Pachon and El Teniente.

Crude: Russian Roulette

Russian Energy Minister Sergey Shmatko has stated that “we are doing everything we can so Druzhba [oil pipeline] can keep working stably and supply European consumers with enough oil”. A host of speculation has surfaced about a new cold war fought over energy resources has resulted from the recent regional tensions, and crude investors will be especially interested as the markets will respond to any news flow in this chronicle.

Uranium: The French Connection

Agence France-Presse reported last week that Jordan plans to buy a nuclear reactor from a French company to alleviate supply shortfalls. Jordan and France signed a nuclear cooperation agreement in May.

Diamonds: A diamond is forever and the demand curve is flat

Earlier in the month, Diamond Trading Company, a marketing arm of De Beers reported that it had raised prices for roughs by an average 5 per cent in July, and that it had increased prices by a cumulative 16 per cent on average for the year. The company saw no softening in negotiations or in demand, noting, “Sight holders were still asking for more goods.” DTC expects demand to remain strong for the rest of the year as weakness in the US would be offset by other aggressive markets, said a company spokesperson.

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