bounce..., page-14

Supply/demand, if there is no demand than the miners are worthless. The way markets are reacting at the moment you would think the world is coming to an end again. Bears have been looking for an excuse to sell down since Nov last yr. First it was Dubai, then it was China 'inflation, lending' in January, and now it is sovereign debt. This is the correction from the May '09 rally. Let's be honest sovereign debt has been a known issue for a while, it's been exacerbated now and hedge funds alike are using it to their advantage, creating mass panic. It will go on until there is nothing to short or to be negative about and when everything has hit rock bottom and the mass media have ran out of stories to be told. There may even be a political war in-between (who knows), money will be circulated around and a new bull cycle will eventually form.

As for KZL, well a yr ago, low commodity prices, high debt, poor balance sheet left them in survival mode, and the sp was a reflection of this. This time round, Mungana will be listed soon (hopefully with a decent raising), no debt, Lounge lizard is making great progress -more to come in June, equity injection from substantial shareholders. There is balance sheet strength now and some really good development projects happening.

I would relax and use this period of time and wait until we hit rock bottom - is low 30s possible again? Anything is possible and by all accounts it looks like the DOW is headed to low 9000s. 2011-2012 will be exciting times for KZL, and I expect things to improve in the Sept - Dec qtr in 2010. I would just sit back and accumulate after the next down leg is done and dusted.

From a TA perspective Leg 1 we've had the fall from 1.20 - 80c (40c) - leg 3 from 80c - 50c and leg 5 will be from 50c to 30c....at this point I will be betting my life savings as KZL will be on the start of a long bullish move finally to analysts estimates of $1.50+. KZL will then have a market cap close to the $1 billion mark. Might be 12 - 18 months away before it happens though. Slow and arduous process going up..quick as you like going down.

I'd recommend investing in some biotech or defence stocks during these uncertain times. As for the banks - well analyse which one has the least exposure to Europe i.e. in bonds via interbank loan exchanges. If one of the PIIGS defaults and more are downgraded, then AU banks who have any kind of exposure will be at risk and their sp will be affected. You will also see yields rise and libor rates go up as will and has the VIX.

Within a single month, we have witnessed Greece announcing possible default, an expansive European rescue loan offered on the condition of devastating budget cuts, soon followed by the "downgraded rating" of the Portuguese and Spanish debts, a threat on the value and the very existence of the euro, the creation of a European security fund worth 750bn, the Central European Bank's decision to redeem sovereign debts, and the announcement of budget austerity measures in several member states.

The grass is always greener on the other side...there will be cashed up people, probably the ones who've sold this stock down, sorry, who will be sitting on the sidelines waiting for the EU and every other negative media propaganda to quieten down and pounce on oversold stocks such as KZL. If you missed the boat to sell and can wait 12-18m and get through this bad karma...then you will earn more with KZL then you can ever earn in buying gvt bonds in the next 2 yrs...that's a 'nobody an predict the future' cert.

Target buy price - 33c (June 2010)
Target sell price - 1.50c (June 2012)