They say you can’t print money. But some people can. It comes via the companies they built.
One of those is Andrew Forrest. His big baby Fortescue Metals ($FMG) just announced their quarterly results. Net cash on the books went up by US$1 billion.
Iron is just so darn profitable for the big three. And this is with a ‘bad’ iron ore price.
FMG is guiding an increase in volumes for the next 12 months too. The iron ore price only needs to hold for the money to keep spewing out of Western Australia.
Again, we keep coming back to the same point.
There are huge amounts of money flowing through Australian commodity companies. And yet nobody really perceives it this way.
Australia is, in fact, spoilt. We take it for granted really.
Iron ore won’t always stay this high, and certainly for as long as it has over the last 20 years or so.
Commodity booms just don’t last forever. No boom lasts forever!
That’s why you and I need to boogie while the music is still on.
Think of all the retirees out there now living off dividends out of WA dirt and the Oz banking system.
Maybe you’re one of them.
If history teaches us anything, it’s that the world changes, and markets move on.
At some point Australia’s two-trick market is going to stop being the cash cow it’s been for so long.
I don’t know when the date comes. But I’m trying to make hay while the going is good.
We can say something about Trump at this point. I think most of his policies are misguided.
But at least he has policies to reshape the US industrial position and economy and puts them under the pressure cooker of public opinion and the political process.
What exactly is Australia’s government doing here?
It seems to me we just keep coasting off moves made in Beijing and Washington.
High commodity prices make this passive strategy look like it works.
What is the plan if iron ore goes to US$30 per tonne?
Of course, there is no plan.
Look at oil producing countries.
They boom for a while when the going is good, then the oil royalties and revenues wither away, and there’s nothing to backstop the country.
Even Saudi Arabia sees the madness of this and is now using oil riches to diversify its economy.
Australia lives off coal, gas and iron ore exports. All of them are under threat long term.
All this is a worry for another day.
Right now it looks like commodities are rumbling, and busting to break out.
I’m seeing upward pressure in iron ore, gold, tin, rare earths, silver and lithium.
I said at the top that some people seem like they can print money.
Governments actually can print money, and both the US and China are juicing markets with stimulus.
They’re not broadcasting it as a matter of “open mouth” monetary policy.
But it’s happening all the same. It’s why bitcoin and shares are at record highs.
This money is leaking into the markets.
Commodities rumbling is further proof.
My earnest advice is to strap yourself on to the freight train while it’s moving.
There will come a time when all it all comes to a halt. That will be a grisly time.
Right now, the going is good. Make the most of it.
Best wishes,
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Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator
Murray’s Chart of the Day –
Australian Dollar
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| Source: Tradingview |
Yesterday I discussed the likelihood of the US Dollar getting hammered if recent lows can’t hold.
The corollary of that could be a rising Aussie dollar and the signs are there that a sharp rally towards 68 cents is on the cards.
Last month saw a monthly buy pivot confirmed from a major buy zone.
The month closed above the 20-month moving average for the first time since September 2024.
The MACD has kicked into positive momentum, with the final piece of the jigsaw a shift into long-term uptrend which is getting close.
The midpoint of the range from the past seven years sits at 68.3 cents and is usually a magnet for price action.
If the US Dollar Index [TVC:DXY] tumbles as expected below 96.37 I expect to see the Aussie dollar race towards the target at 68.3 cents.
Regards,
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Murray Dawes,
Editor, Retirement Trader
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