Phantasmix Stock Market Blog

I’ve heard many times thoughout the year that the market is bound to go down in 2007, “because it always goes down in the years ending in 7″. Nobody knows why or how, but it just happens, deal with it. Just for the fun of it and in part to calm my own fears, I thought I’d check if it’s true. Here’s a chart of Dow Jones Industrial Average (DJIA) annual closing values, courtesy of StockCharts.com. The red lines are my doing – they highlight each year ending in 7.

Click to enlarge

If any conclusions can be drawn it would be that 1) the market (as represented by DJIA at least) does not go down every year ending in 7; 2) true, it did go down in the years ending in 8 a few times; so it’s possible this is what we’re building toward this time as well.

Wouldn’t it be easier to just have the market correct, shake it off and have it over with? Most recoveries have been pretty swift, none taking more than 5 years to get to pre-crash levels.

Chart source: http://stockcharts.com/charts/historical/Print/djia1900print.html

From Infomine.com:

The prices of metals in the currencies of countries that mine the commodities can vary considerably from prices commonly quoted in the press, most of which are denominated in US dollars. Ultimately, it’s the price of the metal in the domestic currency that’s of importance to the metal miner. As such, the dollar exchange rate is a crucial aspect in determining the profitability of a mining company that sells a product internationally.

Metal prices have been going down almost across the board, coupled with the currency rates where they are, this once again reminds me of the 1970′s. Was this year a very bad time to get into (and stay in) the mining stocks?

Interesting interview with Bruce Duncan from Bolero Resources: http://www.cfra.com/chum_audio/Biz@Nite-Bruce.Duncan.Nov7.07.mp3

A few highlights from the interview (tinted by my bias):

• Bolero is developing big molybdenum deposits, and also have a huge undeveloped deposit with the Silver Creek acquisition.
• They did a smart thing securing a loan as opposed to doing a Private Placement to pay for the Silver Creek acquisition. Otherwise, they’d have to do some serious share dilution because share price wasn’t high enough.
• Their properties are in the U.S. (Montana and Colorado) which means they will benefit from the exchange rate: Canadian dollar will go farther in development; wages are cheaper than anticipated.
• They are the cheapest Molybdenum company on the Canadian market and possibly in North America

Full disclosure: I’m long BRU.