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A quick look at FMG this arvo, up another 3.5% and melting up towards anything:
Consider the following:
- iron ore has already departed fundamentals by roughly $30-40;
- it is flying largely because speculators are buying futures on the double boom of Chinese construction and a falling yuan;
- the first is going to slow next year but the second isn’t;
- supply is responding but only slowly because everybody knows it is a bubble and does not want to open a mine only to close it again three months later;
- this deals the majors a strong short term hand over prices.
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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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