Australian Investment Blog

I am currently negative the Iron Ore space and particularly concerned where China demand will lead the commodity longer term. Investors should stand back and remember not just that Iron Ore was over US$180/t in 2011, but also that it was trading below US$20/t in 2004 and for 20 years beforehand – see chart 1. When we look at the price of Natural Gas in chart 2, it has also clearly been on a “roller coaster ride” with a downward bias as world supply grows. Another demonstration of the concerns that I have with investing in price takers, they cannot control their profitability.However after the above negativity, the domestic gas stocks are showing excellent signs of long term profitability. Recent reports from Santos, Origin and Woodside have all been welcomed by the markets.