2006 - Thanks for the Memories

by Rob Kirby, Kirby Analytics. December 29, 2006

What a treat – filling in for Tim Wood – writing the last market wrap of 2006.

First, I'd like to share this newsy item that was brought to my attention by a very astute friend and market observer, Galearis;

Global tin deficit to increase in 2007 and drive prices up
Société Générale has reported a world tin supply deficit of 10,000 tonnes in 2007 and 5000 tonnes deficit in 2008 as compared with an estimated 3,000 tonnes deficit in 2006.
Société Générale in its fourth quarter Commodities Review said that factors causing supply deficits include increased demand for tin which is growing at more than 30% in four years and a major supply shock caused by forced closure of small smelters in Indonesia in October.
The report said that the demand increase has been fueled by growing use of lead free solder mandated by EU regulations that became effective in mid 2006.
Société Générale said that tin output could climb 3% in 2007 but there is no certainty.
Société Générale forecast that LME average cash price for 2006 will be $8,745 per tonne, $8,750 per tonne in 2007 and $7,250 per tonne in 2008 as compared to $7,365 per tonne in 2005.

And Here Is What's Odd About This

As my alert market observer friend so aptly pointed out - this widely published article appears as disinformation at its finest when you actually STOP and consider exactly what is being said,

"Note the huge projection of price for 2007, a whole $5 per tonne increase over that of 2006! Gee, and I wonder why those refineries went under too!? And LOOK, they project a FALL in prices in 2008! But if you factor in the inflation,,,,,,tin has been FALLING in price all along,,,,just like silver!"

The lesson to be learned from all of this - with New Year's celebrations upon us – be careful what you consume!

It seems that year's end has always lent itself to making lists - of the best, the worst, the longest, the tallest, the widest the fattest. Heck, everyone makes a wish list for Christmas - and let's not forget ole Santa – he compiles his list of who's been naughty or nice, then checks it twice.

Then there's New Year's, and doesn't EVERYONE make a list of New Year's resolutions? With this being the case, it seemed fitting that some sort of review of the year's major news headlines might be in order.

With that in mind - and not wanting to re-invent the wheel, with me being a devoted Gold Bug - I thought it fitting to share with a still wider audience this interesting piece published yesterday by Midas Bill Murphy at Lemetropolecafe.com. These headlines were assembled in chronological order by Café member / contributor David R., who, in his own words said,

"As I read the daily news, I have taken to saving PDF files of interesting news articles the second I see them. With the constant barrage of news, it can be astonishing how little time it takes to forget important stories - and many important stories get just a few hours - or minutes - of coverage. I find it helpful, when assessing where trends have gone over the last year, to look back at these archives."

2006 headlines

It's been quite a year, hasn't it? Now, I'd better get back to writing down my own list of New Year's resolutions.

"A government big enough to give us everything we want is a government big enough to take from us everything we have." President Gerald Ford, 1913 – 2006, R.I.P.100

Today's Market

Overseas equity markets were quiet on the last trading day of the year with Japan's Nikkei Index gaining 1 point to end the year at 17,225. North American markets couldn't gain any traction either with the DOW off 38.37 to 12,463.15, the NASDAQ giving up 10.30 to 2,415.30 and the S & P off by 6.45 to 1,418.30. NYMEX crude oil futures gained .52 to close at 60.94.

Interest rates were a basis point higher across the curve with the benchmark 2-year bond ending the day at 4.81%, the 5-year at 4.70% and the 10-year bond at 4.70%.

On foreign exchange markets the U.S. Dollar Index gave up .13 to finish at 83.43.

The precious metals complex ended the day mixed with COMEX gold futures adding 1.80 to 637.50 per ounce while COMEX silver futures gained .03 to 12.95 per ounce. The XAU fell by .87 to 141.30 and the HUI gave up 1.62 to close at 338.24.

Tuesday, Jan. 2 - U.S. markets will be closed for a national day of mourning in honor of President Ford.

On tap for Wednesday, Jan. 3:

Nov. Construction Spending at 10:00 a.m. exp. -.7% vs. prior -.1%
Dec ISM Index at 10:00 a.m. exp. 51.0 vs. prior 49.5
Dec. 12 FOMC Minutes released at 2:00 p.m.
Dec. Truck Sales at 5:00 p.m. exp. 7.7M vs. prior 7.2M
Dec. Auto Sales at 5:00 p.m. exp. 5.3M vs. prior 5.1M

Wishing you all the very best for a pleasant weekend and the happiest of New Years!

Rob Kirby

Contact Information

Rob Kirby | Proprietor, Kirby Analytics Newsletter - Proprietary Macroeconomic Research
Toronto, Ontario, Canada | Observations | FSU Editorials | E-mail