Collapsing fundamental economics Plunging end-user demand for its products Overloaded with debt Hidden land-mines in the form of OTC derivatives Who said ‘black swans’ have to be hidden? Glencore is in full view. After a dead-cat bounce from a quick descent that took Glencore stock from 310 (pounds) to 68 in 5 1/2 months, the stock is rolling over again a headed lower:
This isn’t just about the plunging price of copper, which is now back to its pre-financial system collapse price in 2008 and headed lower. Copper is responsible for generating only 36% of Glencore’s operating income. This is about the plunging prices and demand for oil and all base metals.
It’s about a company (global financial system) that hides a lot of risk, debt, derivatives, corruption and fraud. Point of example: Glencore’s funded debt level is $50 billion and it has the capability to draw on credit lines that would take it up to $100 billion. But the sleazebag snakeoil promoters cite Glencore as having $19 billion in ‘liquid’ inventories so the debt number that gets quoted and widely accepted is $31 billion. But it’s not. It’s $50 billion. And Glencore’s ‘liquid’ inventory is the same base metals that are plunging in price from oversupply and lack of demand.
This post was published at Investment Research Dynamics on November 12, 2015.
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