There are some very conflicting reports out there on how much physical metal there is on the exchanges.

Take zinc for example: in one source …

Zinc stocks stand at more than 77,000 tonnes — more than two days of global consumption. Coupled with expectations of oversupply in the next few years prices dived to their lowest in 19 months.

(2 days doesn’t seem like much?!) Yet another source – article published on the same day – says…

“stocks of refined zinc are currently at less than half of their 30-year average.”

Neither article really defines how much zinc supply is a lot or too little. It’s all in the language and in innuendos, for us to assume.

Here’s the actual picture on LME:    Zinc spot price action:

Whatever mechanisms are bringing the price of zinc down, it’s clearly not due to oversupply. There’s an expectation of increased zinc supply next year which looks (to me) like a faulty speculation at this point. A lot of the big mines are reducing production of zinc, instead concentrating on refining other metals that are more lucrative at the moment.

For the time being, I stay invested in Blue Note, Canada’s newest zinc and lead producer. Very curious to see how the zinc story plays out next year, when Blue Note is expected to ramp up its production to full capacity.