For the price movement inquiry from the Australian Stock Exchange was after Jubilee’s share plunged from $7.85 on September 5 to $6.76 on Friday September 9 – a fall of 13.8% in a matter of days.
To be fair, Jubilee fought back to close on Friday at $7.37, but the damage was done (albeit unseen) by that ASX query.
Dryblower, who echoes the positive sentiment that surrounds Jubilee, reckons the “reversing fine” from the ASX is a massive (huge division) warning to all investors that the boom has peaked, and is leaking air – rapidly.
Two weeks ago, much to the annoyance of the cheer squad on the sidelines who want the boom to rumble on forever, Dryblower explored the possibilities of a steady fall in metal prices, and mining company share prices.
Is the Jubilee example, and a decision from Hong Kong-based Noble Resources to exit half of its stake in the similarly well-performed miner Consolidated Minerals, further evidence that the metals market is settling back to a new (and lower) level? And does this mean the game is over?
Probably not! But, what it could mean is that much of the speculative hype is being washed away from recent favourites.
Chinese demand, and an economic revival in Japan, are the immediate keys to demand growth for metals. Without these two countries global consumption of some metals might be falling, rather than rising.
The tricky question for everyone is to guess how much damage is being done to China and Japan by oil at $US65-plus a barrel?
It is factors like these that weigh heavily on investors in mining shares.
Without wishing anyone any harm, consider some of the “noise”. In the case of Consolidated, Dryblower is unsure which is the more significant event; Noble Resources selling half of its 12.4% stake – or the AMP buying the bulk of Noble’s discards?
An old rule of thumb in the market was whenever you saw AMP buy, it was time to sell because the former ASX darling was always last to party.
The modern, funds-management focused AMP, might be different, so Dryblowermight be gracious for now and reserve judgement.
Meantime, the Jubilee reversal was awful by any measure – and especially awful when measured from top to bottom, as shown in this little example.
On August 16, just 19 trading days ago, some “lucky” devil splashed out $8.98 a share for his parcel of Jubilee – an all time high. If he had sold on Friday at the low point picked up by the ASX, $6.76, he would have dropped $2.22 a share, or suffered a fall in value of 24.7%.
Yes, yes, yes –Dryblower knows this is an extreme example of the market’s movement – and the sort of trade only day traders and some institutions take – but it’s what happened, even if some of you want to stick your heads in the sand and pretend it didn’t.
