I would be interested in your view on what this guy has to say....

Abstract

This article is an updated version of an article that was published in Seeking Alpha. I have updated  and clarified certain definitions. The relevance of that article in todays' Market justify this updated publication.

The commodities we are concerned with here are those with potentially very low storage costs. Minerals, when kept in the ground, have a storage cost next to zero.

I observed a strong link between the evolution of the market price of minerals and the shape of the yield curve.

The slope of the yield curve indicates the fair valuation or not of the price of short-term assets compared to long-term assets.

I am going to show that the shape of the yield curve is a first order parameter of the evolution of the price of minerals.

When the yield curve is inverted, because of profit maximization, Miners & Drillers prefer hoarding a higher proportion of their minerals in the ground (their preferred short-term assets) rather than extracting them and investing the proceeds in long-term instruments. Hence, the marginal cost of extraction of minerals becomes irrelevant to their market price as miners stop maximizing their output under the constraint: Market Price - Their Marginal Cost of Extraction.

My instinct is that he has put his finger on something. You are much more clued up than me: what do you think?

Re carbon trading, IMHO it's one of those things that works in theory but not in practice. It's probably the biggest boondoggle since the Millennium Bug: promoted by middlemen and consultants, for the benefit of middlemen and consultants.

Totally impractical. I just got back from speaking at a conference in  Bristol. The guy from Defra (relevant UK government department) was basically saying that no one has a clue how Carbon Reduction Commitments are going to work - all help gratefully received...

....oh dear.

Why monetise something worthless, like CO2, when you can monetise energy value quite straightforwardly?

FT Alphaville

"The future is already here -- it's just not very evenly distributed" William Gibson