While some people might not see the difference between what a politician promises and what a mining promoter pledges they are actually a world apart.
Politicians, who are best defined as people able to keep their balance by saying the opposite to what they do, are chasing votes because they crave the power to change the country, whether it needs changing or not.
The diggers and dealers gathering in Kalgoorlie have a much simpler and purer objective. They want money and even if that means telling a few porkies at least everyone knows the rules of the game – and most remember to apply a healthy discount to everything they say.
Given a choice, Dryblower will always move towards something he understands, even if it is greed and like most older observers of the mining industry, he has developed an immunity to the nonsense on the sidelines of Diggers that appeals to the young and the gullible.
The purpose of making the trek this year to a rather tired event was to test a theory floated in this column last week – that better times are on their way for shell-shocked miners and their stockbroker accomplices.
Support for the belief that the worst of the 2013 crash had passed has been gleaned from the rather healthy share price moves at the top end of the mining industry where sector leaders such as BHP Billiton and Rio Tinto enjoyed recent rises of around 14%.
Interestingly, since calculating those moves the big four of world mining added another 3% to their value last week.
Not noticed last week was the change that also seemed to be gaining a foothold at the bottom of the mining industry’s pecking order. While there will still be casualties over the next 12-months there is evidence that discerning investors are taking a fresh look at mid-tier explorers and miners.
The Diggers speaker’s list provides a useful testing ground, and even points to the exact time when the bottom was reached: the week beginning June 24.
If in doubt about the date, or the reason behind what could be a sustainable recovery, consider first a selection of the companies that have speakers on day one of the forum.
Alacer’s share price hit a 12-month low of $1.94 on June 28, the same day the gold price was fixed on the London bullion market at a multi-year low of $US1192 an ounce. Since then the gold price has recovered and so has Alacer, which closed last Friday at $2.40 despite booking an asset impairment charge of $US412 million.
Independence, Northern Star, Western Areas, Panoramic, Sirius, Regis and Atlas were other companies tested by Dryblower for a late June bottom with all hitting their 12-month low points between June 25 and June 28.
Unwise as it is to use the boom word there is evidence of something like a boom unfolding in the world’s biggest economy, the US.
It will take time for investors to grow comfortable with the concept of the US stock market trading at a five-year high, and even longer for the optimism to trickle-down to smaller markets and those directly exposed to fading star that is China.
But, as Dryblower watched events unfold on the New York Stock Exchange he couldn’t help feeling that normality might be breaking out after the turbulence that has gripped the world since the 2008 start of the global financial crisis.
A handful of higher share prices is not sufficient evidence, especially when the recovery of the past six weeks is compared with the size of the falls. Alacer’s recent $2.40 and Atlas’s 84c might look better than their June lows but their latest prices still look awful against their 12-month highs of $6.85 and $1.94.
The real point of Dryblower spinning a tale of recovery is that the driving force is coming from a country you can believe in.
China might have been a useful sink for commodities over the past 10 years but it was always a place run by more liars than you’ll ever find in Canberra or under the big marquee at Diggers.
The US, undoubtedly aided by highly unusual monetary policy and ultra-low interest rates, is in recovery mode, as Monday morning’s keynote speaker at Diggers, Austan Goolsbee, will explain.
If history is a guide a healthy US economy will eventually flow through to the rest of the world and that can only be good long-term news for minerals demand.
The effect on Australian mining of a healthy US will not be immediate. However, rapid recovery in that country, and the first signs of a revival in Europe, will gradually replace a slowing China.
