Its very pleasing to see the way the markets are moving now here in the second quarter after Easter, it certainly looks as though were going to see a very strong run in the commodities sector/resources sector, as weve been expecting. The key to the drive, of course, is the American bond market. I have to emphasis just how important the weakness is that were seeing in that market the interest rates had been falling for 28 years and now the bond market is signaling that were going to see an extended period of rising bond yields, that means rising interest rates. The causes behind it; probably the very large increase in money thats available there in the United States, were seeing increases in prices in all sorts of food stuffs and consumer items, so were seeing inflationary pressures which means that real interest rates are still quite low.
Commodity markets around the world, lead by gold, are showing its anticipating higher inflation periods and were also seeing a continuation of the world inflation recovery and that means that the demand for commodities themselves is very well underpinned. Weve seen 100% price rises for iron ore, very strong moves in coal, copper markets looking good, nickel, zinc, aluminum, these are all very, very robust and I expect to see strong moves in those ahead.
Now what this is saying to us, as weve been pointing out with our road map, is that we are now in the optimism up-leg we had that disbelief, wave one up-leg, for ten years, we had a very sharp sell off into the pessimism down-leg into the bottom of 2008/2009and the first leg up, weve had four months of quite weak market as it goes through a sub-pessimism wave, but now were on to a move which will see the big stocks, like BHP and Ucrest, Woodside , here on the Australian market, looking very, very good, but also were seeing at last some volume into the small stocks that we like. We think theres outstanding value in many of the stocks. It doesnt matter whether youre looking at coal, iron ore or nickel or gold or oil and gas, there are really, really good opportunities coming through and youre going to be surprised at how the market breadth is improving, there are new stories coming out were very excited about our Falcon Oil & Gas project, there in the Beetaloo Basin, which is paralleling some of the developments in shale gas, but more importantly, Shale Oil , like we have in the bark and shale in the Wollaston Basin. Thats happening here in Australia and its the next step on from the coal seam methane area which has had such a big boom
Anyway, talk to your advisors we are now coming into a very, very strong market and this is going to be extremely good for Australian resources