Ground control to Major Tom. You’ve really made the grade. (picture source)
Globally, how long does an average buyer hold his stock?
Circuit breakers kicked in to stop the avalanche of selling on the Chinese stock market. Traders left with nothing to do just played cards on the trade-floor of the Chinese Stock Exchange. Is this a proper stock-exchange? More like a gambling casino with stop-losses imposed by the State. It is a mystery why some see this Oriental bazaar as a bellwether for future metal consumption.
The average time a buyer holds a stock is 22 seconds. Strobe trading and flash crashes. Chickens on crack. Hopefully there are some outlier investors who see as far as the horizon. The flash traders at least provide liquidity. Only a handful of zinc mines have gone from discovery hole to production in under ten years. It is hard to grasp the time-span of attention necessary to develop this handful: Century, Lisheen, Cannington, Louvicourt or Campo Morado. Some 300 million seconds or 14 million times the average holding period for a stock.
We came back after Christmas. A time for reflection with surely a broader longer term view to start the New Year. Myopic fear returned. It was the worst start for global stock markets since 1994. Some $2.3 trillion dollars wiped off the value of global stocks. So we started 2016 with a shudder and a quake and the lemmings with bifocals once again rushed for the cliff.
Too much information to consume on the world-wide-net. Big data stressing us out as we try to understand this complex financial world – maybe the stress comes from trying to control it. What do the statistics and metrics and ratios all mean if we could rely on them and interpret them properly. The outcome of a poker game in China surely predicts the future demand for zinc.
Will China’s metal consumption drop in the shift from a manufacturing to services based economy? You hear these gurus saying this but they do not say how long it will take which might be important for an investor. How long did it take metal consumption to recover after the crash? In 2007 before the financial crash the USA consumed 3.6 kilogrammes of zinc per capita. It was 2.5 in the UK and 6.6 in Germany where they still have a proportionally strong manufacturing base. By 2011 these consumption levels had recovered to 3.2, 1.9 and 6.2 respectively. So it was not the end of the world. For the first time in 2000 China started to consume more that a kilogram of zinc per capita. Already by 2010 China’s zinc consumption had more than tripled to 3.5 Kg per capita on the back of building new cities and major infrastructural projects – the super-cycle, or so we thought.
In 2000 zinc consumption in sophisticated service economies like the US and UK was 4.8 and 3.6 respectively. So even if China eventually evolves into a much more sophisticated economy like the US and its population does not grow metal consumption should increase.
As for currency fluctuations and a weaker Chinese Yuan? Between 1975 and 2007 US per capita zinc consumption never moved out of a range between 3.4 and 4.9 without a trend over time. It averaged 4.2Kg per capita per annum – lots of currency fluctuations during that time.
Zinc is a base metal. A base metal is a common and inexpensive metal, as opposed to a precious metal such as gold or silver. It is the 24th most abundant element in the earth’s crust so based on this it is base. But finding zinc in concentrations which can be mined is rare and precious and that is valuable. The response in sometimes why explore when you can buy zinc in the ground for less than the cost of discovery. But beware that some of these lbs of zinc in the ground are worthless as they will never be mined.
Ziggy Stardust has passed. An icon sprinkled across the heavens. At least we are left with his music. His tunes punctuated the soundtrack of our lives. He was a gentle and kind man, pushed boundaries, a psychedelic and androgynous rock icon, a special talent if not a genius. R.I.P.
I laughed and shook his hand
And made my way back home,
I searched for form and land,
For years and years I roamed.
I gazed a gazley stare at all the millions here:
“We must have died alone, A long long time ago.”
Lyrics by David Bowie from the Man Who Sold the World
John P. Barry
Managing Director of Irus Consulting Ltd. and Professional Geologist
A widely travelled and highly experienced economic geologist, John Barry is a confidential counsellor to the likely investor contemplating a considerable investment in the intricate business of mining metals. Dont take a flyer and trust altogether in luck and invest your money in an exploration or mining project on the strength of a printed prospectus or the advice of an interested friend without the preliminary investigation and site visit of a reliable geologist with a basic grasp of commerical reality. Irus Consulting provides strategic and practical management advice and guidance to its clients. Time is a precious commodity for my clients, and indeed myself, as it relentlessly ebbs away and so I try as best I can to avoid the mediocre - those projects and their champions which do not engender enthusiastic belief and passion.
Irus Services Include:
- High-level strategic advice
- Practical guidance and assistance on project sourcing, acquisition and implementation
- Rapid identification of key project value-drivers and potential fatal flaws.
- Capacity building and coordination of external consultants.
- Design and targeting of effective marketing campaigns
John Barry was part of very small teams which discovered and sourced several multi-million ounce gold deposits in Africa. He has worked as an economic geologist since 1988 and as a consultant and then responding to the entrepreneurial spirit he was a founder and manager of three public resource companies which raised a total of US$70million. These resource companies are currently successfully exploring and developing gold and base metal projects in Europe, and sub-Sahara Africa. John has seen a lot of rocks working for consultancies such as CSA in both Ireland and Australia and as Senior Associate Geologist with Chlumsky Armbrust & Meyer LLC which is based in Denver. He is a specialist in zin-lead exploration and in 1992 joined the exploration team which discovered the Lisheen zinc-lead deposit in Ireland as the resource was being expanded in the first couple of years after discovery and in 2008 led the first non Polish exploration company to successfully enter and acquire a major resource-project in the Upper Silesian Mississippi-Valley-Type (MVT) zinc-lead district in southern Poland the worlds largest minerlised district of its kind. John (P.Geo and EurGeol) holds a Masters Degree in Geology from Pennsylvania State University and a MBA from the Edinburgh School of Business, Heriot-Watt University, Scotland.
I would like to think that I have shown the tenacity, patience and focus required to implement many of my better ideas over the years and that I have learned valuable lessons from some failures. I believe one of my strengths is in communicating quite complex technical ideas in a concrete way that can be easily understood. I am a team- builder and motivator by projecting my enthusiasm and vision for a project. I am committed to the development of young geologists through supportive delegation. John is now moving more from managing public companies to freelance consultancy and a more advisory role so as to concentrate increasingly on assisting management in effective exploration and discovery. He is Managing Director of his own Exploration Management and Geological Consultancy: Irus Consulting Ltd. Please visit www.irusconsulting.com for more information and free newsletter registration.
John is now moving more from managing public companies to freelance consultancy and a more advisory role so as to concentrate increasingly on assisting management in effective exploration and discovery. He is MD of his own Exploration Management and Geological Consultancy Irus Consulting Ltd.