chart - target price $1.48, page-31

Gself,

I'm not disagreeing on the long term fundamentals at all, mainly for the reasons you have outlined.

However, have a look at this link showing LME warehouse levels:

http://www.infomine.com/investment/charts.aspx?mv=1&f=f&r=1y&w=wnickel_lme_warehouse,wcopper_lme_warehouse,wlead_lme_warehouse,wzinc_lme_warehouse#chart

It clearly shows warehouse levels increasing. Prices follow a similar trend in an upward channel (albeit with perhaps a slight pullback recently.

So, in my opinion one of two scenarios is playing out. Either prices are rising (even though supply is increasing) in anticipation of a world wide recovery, or hedge funds have open positions driving the price north (or perhaps a combination of the two). Obviously warehouse levels are not going to continue to rise forever so we need a pickup in demand relatively soon, or I can see base metals prices coming off slightly (in the short term) to accomodate excess supply levels. I believe this is why KZL SP has declined recently.

Good buying for long termers who believe demand will increase to more 'normal' levels over time.

JT