Big Iron blows off as Big Gold takes off

Big Iron has blown off this morning on the falling US dollar with all three majors rocketing at the open including FMG hitting $5.28! Forgotten in the frenzy was that iron ore is actually falling, with Dalian down overnight and down even more at the open this morning. So, as I write BHP is 0.5%, RIO flat and FMG is now -1%:

The AFR notes that FMG shorts have now completely collapsed:

Shaw and Partners analyst Peter O’Connor said reduced short positions in Fortescue made sense given that company’s strong recovery in recent times, but it was less clear why BHP and Rio were increasingly catching the attention of short-sellers.

Macquarie analyst Hayden Bairstow said the iron ore sector seemed to attract short sellers.

“There is obviously a whole bunch of shorts on iron ore, and perhaps the fact that Fortescue is de-gearing so quickly means people have no option but to turn to Plan B which I guess has been Rio in the absence of anything else,” he said.

“People have been so caught by Fortescue.”

Me included! But this does not make sense. FMG is still far more leveraged to iron ore than is RIO or BHP and if, as I expect, iron ore falls back to the mid or low $40s in the next few months then FMG is going to be a much better short than the big two, especially with coal likely to outperform iron.

Big Gas is going e-div with WPL -0.8%, OSH -2.7%, ORG 0.6% and STO -2.3%:

Big Gold is back with NCM 3.3%, RRL 4%, IGO 2.5%, EVN 6% and SBM 2.4%:

I’ve been looking for a good flush of prices with a hawkish Fed but, as I wrote this morning, they’ll have to hike into bad data now so I’ve given up on them. With oil set to fall and China to slow, I now think that their window has closed. Even though the huge comex long has barely budged, I’m a buyer today.

Finally, the banks are all up firmly with wider markets: