Morning Report Monday 12 May 2014
Nickel prices are the highest in two years as Iron Ore softens, switch?
Nickel hit its highest price in more than two years on Friday, as persistent fears of a shortage were compounded by a suspension of Vale's nickel operations in New Caledonia. The metal is trading 44 per cent higher so far this year, in China and Japan, buyers are scrambling to secure supplies as rising prices and a fear of shortages boosts demand. Alternatively, Iron Ore is close to testing the lows of the previous two years – a great example that just like shares all metals do not move in the same direction. Often in this situation, I will consider taking profit on the Nickel stocks and buying the Iron Ore stocks but as I have previously outlined, I have price targets significantly lower to start buying Iron Ore stocks e.g. Fortescue (FMG) at $4.20 so today I will simply look at the some Nickel stocks.I have covered the Nickel stocks today because not only are they topical but they also they demonstrate the significant risk investing in stocks that are price takers. All 3 stocks looked at below are still trading between 50 & 85% below 2007 highs. This is why I am generally a trader of resource stocks not a long term investor.
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