Both molybdenum and nickel are used in the production of steel. Yet, the price of each has fared quite differently the last three months. Molybdenum has tumbled from a high of $18 to $12, hurting my previous favorite Thompson Creek (TC). In contrast, nickel has steadied at $8.69.
Why the difference in price trends? Could nickel be benefitting by strong demand? Certainly that's not the case as rising LME stocks show. In fact, nickel inventories are reaching all time highs. Stores have gone from under 10,000 to over 120,000 as production outpaces demand.
And the last three months LME inventories have shown no let up, just overflowing nickel stocks.
So why the discrepancy between nickel price and rising stocks? Why is nickel holding up while molybdenum is crashing?

I think it's due to the "animal spirits" of commodity traders who are willing to bid up nickel in the face of weak fundamentals. Future traders seem to be looking at the weakening U.S. dollar and buying every commodity in sight: copper, oil , nat gas (UNG) regardless of demand and supply. That doesn't exist in the world of moly, a mineral that lacks a futures market yet has world wide applications.

Consumption, speculation and growing demand by emerging economies add up to a rather rosy outlook for copper, says Steve Parsons, Senior Research Analyst for Wellington West Capital Markets. In this exclusive Gold Report interview, Steve explains how investors might capitalize on a theme that's picking up momentum on the copper concentrate side of the industry. He also sheds some light on a great copper story that's unfolding on the northern shore of Lake Superior in northeastern Minnesota, not far from the Ontario border.

The Gold Report: Steve, it's often said that copper is a great way to play a period of economic growth. Do you agree with that?

Steve Parsons: I absolutely agree. Copper is an essential metal for developing nations. Generally speaking, an increase in GDP/person coincides with an increase in copper usage. The story here is that China and India are still coming from a low base. If you look at where copper usage is in developed nations, it is upwards of 9 kilograms of consumption per person annually. China's consumption currently weighs in at approximately 3.5 kilograms per person. So China is still at an early stage of development. The move to urbanization should keep upward pressure on copper usage. By 2025, it is projected that China will have 221 cities with a population of more than one million. At present, Europe only has 35.

Gold mania is upon us once again, with spot prices rising through $1,000 an ounce and Barrick Gold Corp. (ABX) launching a record-breaking equity offering.

With that as a backdrop, Canaccord Adams analysts Gary Lampard and Orest Wowkodaw figured this is a good time to look at which base metal companies in their coverage universe offer the most leverage to gold in fiscal 2010. The winner is HudBay Minerals Inc., which could have even more gold exposure in the future thanks to a discovery on its Lalor Lake project in Manitoba.

Molybdenum producer Thompson Creek Metals Co. (TC) announced a bought-deal financing on Tuesday worth C$217 million for development and expansion, but there may be other options for the company, including acquisitions.

The company announced plans to use the cash for development and expansion of existing mining assets, exploration, acquisitions, working capital, and general corporate purposes. The financing deal, at C$14 a share, can be further upsized to C$250 million and is expected to close on Sept. 16.

4:20 PM, Aug 26, 2009 --

• NYSE down 9 (0.1%) to 6,687.94.
• DJIA up 4.23 (0.04%) to 9,544.
• S&P 500 up 0.12 (0.01%) to 1,028.
• Nasdaq up 0.20 (0.01%) to 2,024.

GLOBAL SENTIMENT

Bullish Calls:

Celgene (CELG), Gilead (GILD): "Gilead is much cheaper (than Geron). Buy Celgene on any pullback, absolutely."

When I last posted on Thompson Creek (TC) on May 7, it was trading at $7.59. This pure play molybdenum miner is currently valued at $14.57, almost double. It has outperformed the SPX and its index XME. Is it time to ring the register?

The six reasons to continue buying TC still hold true:

Most people think of warrants as being associated primarily with micro/nano cap i.e. junior gold and silver mining companies, but that is not entirely the case. Of the 35 companies offering warrants of 24 or more months duration (of which there are 47 in total) 6 are large-cap commodity based companies (2 gold mining companies; 2 royalty companies; 1 oil and gas company; and 1 molybdenum miner).

Below is a description of each of these companies and the performance of their stock and associated warrants week-ending July 10^th.

		Last Week's Performance*
	vs. Prev. Week	vs. Prev. Month	YTD**
Warrants (+24mo.)	-2.8	-13.1	71.5
Stocks with Warrants	-1.8	-9.1	40.9
CDNX***	-2.1	-8.6	44.4
HUI****	-2.9	-6.8	13.3
GDM*****	-2.3	-7.3	13.1
SPTGD******	-1.8	-6.1	7.4
TSX	-1.4	-7.5	20.5
S&P 500	-2.4	-4.6	-0.8
Silver	-4.9	-12.3	18.5
Gold	-1.1	-2.6	5.1

* All calculations are based on U.S. dollar equivalents

Mining analysts at RBC Capital Markets continue to recommend an overweight position in uranium and fertilizer stocks, a market weight position in precious metal stocks, and an underweight of bulk commodities and base metals stocks.

The global team updated its 20 Best Ideas portfolio with seven new names but left the recommended weightings for the third quarter unchanged, saying we remain in the early part of a global economic recovery.

Based on this update from TC, I have revised by estimates for the current financial year. Assuming an average molybdenum price of $10 a pound for the rest of the financial year, a production of 24 million pounds and cash production costs of $6.5 a pound, I now expect Thompson Creek to report an EPS of $0.34. My 2010 EPS estimate remains unchanged ($1.10).

Thompson Creek was adversely affected by the sharp decline in prices and resorted to production cuts in response to lower molybdenum demand. In January, it announced that its molybdenum production was expected to be in the range of 20 to 24 million pounds in 2009, revised from previous guidance of 31.5 to 34 million pounds. This was in line with the 10 million pound production cut announced by Freeport-McMoRan (FCX), the largest producer of molybdenum in the world.

We are pleased to bring you the results of a 10x45 Bargain Hunter screen for cheap companies buying back their own shares. The screen results are sorted by the quarterly sequential percentage reduction in shares outstanding.

The screen results are based on the following criteria:

TWST: Let's begin with a brief historical sketch of the company and a picture of the things you're doing at the present time.

For much of 2008, molybdenum defied the commodity collapse holding up at $32. Copper failed. Nickel dove. Then, in November 2008, molybdenum joined every other commodity in the "Big Commodity Crash" collapsing 75% of its price in literally 2 weeks.

That lag is about to reverse. We've watched copper come roaring back 70% off its lows. Now it's moly's turn. This key ingredient in steel has already started a run. This week moly prices have rising 16%.

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up, we have Daniel Loeb's Third Point LLC. Third Point is a $2 billion activist and value based hedge fund. Specifically, it deems itself to be "event driven, value oriented investors." Loeb founded the firm back in 1995 with $3.3 million in seed capital and is still running the show these days. While Third Point is technically an activist fund, Loeb often has numerous passive investments as well.

Bring on the quants! Macquarie analysts Javed Jussa, Yin Luo and Rochester Cahan used quant factors to rank mining stocks based on a combination of their ability to perform well in a rebounding market, but still hold up if the market deteriorates again.

They studied all the Canadian metals and mining stocks over the past three weeks (when they had a major upswing) and over the past three years (when the market went from bull to bear). They figured out which quant factors had the most predictive power for the miners during both periods, and screened all the companies against the combined list.

Every so often, MagicDiligence compiles a list of Magic Formula stocks sorted by their dividend yield, price-to-sales ratio, and price-to-book ratio for investors that like to use those metrics. The result is a list of attractive value stocks for additional research. Here are the top 10 in each of the three metrics listed above:

Dividend Yield