Glencore's Colquiri mine seized in Bolivia
Glencore has demanded compensation from Bolivia after the country's Left-wing government nationalised one of the commodities group's tin and zinc mines.
'via Blog this'
Resource nationalism
Angry people without money or food need a bogie man to blame and some leaders are happy to point the finger.
Argentina has nationalised the assets on its soil of Repsol the Spanish oil company. Further to that Argentina is sabre rattling over The Falkland islands which lie 500miles of it's coast. The arguement being that British colonialism shouldn't own somewhere on the other side of the world but Argentina should because 500miles is closer that to Britain. The fact the inhabitants of the islands have been there over 180 years when it was an uninhabited rock and class themselves as British is irrelevant to the Argentina. Perhaps the new discovered oil in the Falklands is the real reason for the claim, or sour grapes over being bankrupted in 2001 by Western banks, some of which were based in London.
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| David Cameron and Cristina Kirchner |
With rescource nationalism comes a withdrawal of capital and infrastructure. Perhaps this would have a deflationary effect as companies and banks become cautious about taking risks in nationalistic countries, but the world still needs metals and I'm sure China will be happy to buy South American metals regardless of ownership. Albeit and a knock down price.
Rise or fall
Metals may drop in price if there is a Western deflation. (People not buying mobile phones or computers. )
Metal prices may rise if a lack of investment in the newly nationalised state run mines with incompetent direction make it more difficult to extract metals and creating a shortage.
If there is deflation there will be money printing. If there's money printing pensions and savings will rapidly lose value, food will become expensive and people will become angry. As angry as the Arabs in the Arab spring, but this time it will be right outside your door.
Regardless of metal prices rising or falling prices in currency there is always a need for metals, and that's why it is worth holding as an investment.
I would say that wouldn't I because I sell metals? Well, yes prices of metals have dropped this last year, but a colleague of mine said he paid £30 for his gold wedding ring 20 years ago. I estimate it to weigh about 8 grams which means it's worth about £250 in scrap value. An 8 fold increase in price in just 20 years!
Food for thought.
