13 May 2006

Metals super cycle rolls on

Townsville Bulletin: Metals super cycle rolls on [ 13may06 ]: "IT seems too good to be true. Commodity prices were at fresh records again this week.

Gold prices hit a 26-year high of $US721 an ounce yesterday, 2 1/2 times the low of $US269.50 reached in May 1999.
Copper briefly hit an all-time record of $US8790 a tonne, six times its 2001 price. Zinc, at $US3880, is 500 per cent up on its price just three years ago. Nickel at $US21,200 a tonne has increased fivefold since 1998.
Far from losing steam, the commodities boom is gathering fresh strength and is poised to reshape the face of business and the economy.
The upward march of the resource companies is set to continue, accompanied by a rising Australian dollar.

Manufacturers and export service industries, such as tourism, have complained loudly about the strength of the currency, but those who track the relation of the Australian dollar to mineral resource prices say it is seriously undervalued. Markets agree.
The federal Government, which was expecting no further gains in commodity prices in 2006-7, and declines after that, will again be swamped by an abundance of company tax revenue in next year's budget.
It will face increasingly shrill calls to redistribute gains to those the boom has left behind.
The idea of a super cycle in commodities has shifted from the realm of theory and is fast becoming a reality.
Base metals prices have risen by more than 40 per cent this year in the face of rising world growth and falling stocks.
'It is not just metals. Almost every commodity asset class, whether it is crude oil, precious metals, industrial metals, sugar or even bananas is going bananas,' says ABN-Amro's global head of commodities, Nicholas Moore.

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