Fed pumps PNG stocks

RESOURCE stocks exposed to PNG were generally up this week as the US Federal Reserve Bank decided to unleash $US600 billion worth of quantitative easing which provides further support to gold and other commodity prices.

While commodity prices remained pegged to the US dollar, some of their gains might also represent a trend of capital flight into tangible assets as various central banks in the developed world continue to devalue their currencies.

By mid-afternoon ADST, spot gold was down 3.51% to $US1388.49 an ounce from yesterday, but was up 2% from the end of last week.

While gold trading is always volatile when it breaks new ground, it is continuing its long-term upward trend with the psychological barrier of $1400/oz not too far out of reach.

Meanwhile, the London Metal Exchange cash official price for copper is trading at $8521 per tonne.

This is a 3.6% improvement from last Friday's close.

Copper is seen as a leading indicator in trading circles and its upward trajectory is not only good for PNG, which is blessed with abundant copper resources, but is good for resource plays overall.

LME cash official nickel prices are trading at $23,970/t, up nearly 5% for the week.

The resurgence of nickel over the past months is a positive outcome for the Ramu NiCo project in PNG, but is also at least partly caused by US dollar devaluation as the Fed ramps up the circulation of the currency.

Asia Pacific benchmark Singapore Tapis crude closed at $US95.82 per barrel overnight, up 9% compared with last Friday's close.

Whether rising fuel costs will impact PNG is yet to be seen and depends on how the kina holds up against the US dollar, with the Aussie dollar again moving above parity against the greenback in the past day.

The biggest mover on our watchlists was Bright Star Resources, previously known as Tasman goldfields.

The company recently placed one of its two PNG companies into liquidation plus relinquished noncore tenements, while its shares rose on its Tanzanian gold ambitions.

Otherwise most of the PNG-focused companies gained ground as copper, gold and oil prices increased.


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