Rule: “One of the interesting things we have been seeing in the markets is relatively stable metals prices in the face of very weak demand. We are in this so-called recovery, Eric, but it is certainly a recovery with no capital investment and no jobs….
“This so-called recovery has been driven by low interest rates and stimulus. But it’s interesting that in the face of very tepid demand from Japan, western Europe, and North America, that commodity prices have held steady or even risen. Why have commodity prices held stable or risen? It’s simple: because we’ve had supply constraints too. Although demand has been moderated, supply has been much less than anybody had anticipated.
It’s also interesting that despite major merger and acquisition activity in the mining business over the last 10 years, and major exploration activity over the last 15 years, production of all the major commodities, particularly gold and silver, has stayed flat.
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