Gold miners ETF massively underperformed gold price in recent months saham.ws While I would agree it is not easy to quantify the real demand for bullion, demand for coal is a different story. Our recent China Reality Research showed that coal inventory at major ports and powerplants are critically low. Meeting with some Chinese coal traders (representing state owned power plants + privately owned steel mills) here last week tell us the same story. They desperately need to source coal (each contract size from 1-3mm tons/annum). According to the traders, most of the 2H2011 coal output of major coal miners have been sold out and they need to go down to those smaller miners (those abt 5-10mt pa) who are more willing to sell on spot. Due to China's tightening policy, the short term cost of capital gas been so high that owners of slack resources would apparently rather sell them at discount to quoted prices so they can release capital that might be needed. This has translated to critically low stock piles in commodities such as coal, copper and even rubber. (note: Copper stockpiles monitored by Shanghai Futures Exchange declined to 21 month low). As we head into peak demand season 4Q, we expect resumption of restocking in the 3Q. Destocking has created a big buying opportunity. I would be buyers of Bumi (BUMI IJ), Borneo (BORN IJ) and Harum (HRUM IJ) .
