Ann: Mincor Unveils $30M PNG Gold and Copper Tran, page-10

re: Ann: Mincor Unveils $30M PNG Gold and Cop... Ni prices have been coming down in tandem with LME inventories, which haven't been this low since about mid 2009. I have never been able to establish a relationship between Ni price and inventories, but i would think that decreasing inventories would help hold up the price a bit.

Logic would suggest that prices of commodities and inventories would be inversely related but in my experience they are positively co-related surprisingly long periods of time (see http://www.hotcopper.com.au/post_single.asp?fid=279&tid=1186455&msgid=6661911).

During GFC, base metal prices kept dipping even though inventories were shrinking. I think a lot of the inventories are held as investments. So when prices are rising, people accumulate more inventories in anticipation of even higher prices to sell into. When prices are falling, people are trying to get out of the market even though inventories are falling.

Same had been happening with oil recently. Price of oil was going up even though stockpiles in the US were growing. Surprising how one recommendation by Goldman Sachs can shift global commodity price by 5% in the blink of an eye.