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For Marc Faber The Iron 'Ore' Lady Has Sung

Tyler Durden's picture


Frustrated with the know-it-all bullish 'experts' on the Chinese economy lambasting wise boots-on-the-ground deep-thinkers such as Hugh Hendry and Albert Edwards; Marc Faber (who discussed this in detail in the clip we presented here) today set about correcting some of that vacuous chatter on China's dominance (with all its current stuffed inventory). Noting that the Chinese stock market is not exactly pointing to the growth everyone is relying on (and we add since the MAR09 lows it is only fractionally better than Spain), Faber brings up one chart (courtesy of The Bank Credit Analyst) to rule them all. Alongside the mega-bubbles of: Gold in 1970s, the Nikkei in the 80s, and the Nasdaq in the 90s, Iron Ore prices since the start of 2000 have them all beat - and recently (as we noted here) have begun to roll over.


The four biggest bubbles of the last 40 years... with Iron Ore the clear winner...


and how is China's equity market doing?


as Faber adds:

All these indicators [which he discusses at length from electricity production to Macau gaming revenues and consumer spending habits to appliance and air-conditioning volumes] do not necessarily suggest that the Chinese economy is collapsing, but they reliably do suggest that the economic slowdown is more pronounced than official Chinese statistics would have you believe. In addition, these indicators do not imply that the Chinese stock market will decline further (but it could). Perhaps the weak performance since 2008 has already discounted much of the slowdown in economic growth.

Charts: The Bank Credit Analyst and Bloomberg

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Thu, 08/23/2012 - 22:03 | 2732437 max2205
max2205's picture

Iron ore.... Where's the 3x ETF?

Thu, 08/23/2012 - 22:12 | 2732452 AldousHuxley
AldousHuxley's picture

that's why china is going to print more...



Thu, 08/23/2012 - 23:56 | 2732658 Michael
Michael's picture

Have you heard there's a run on Vietnam banks tonight? I always enjoy a good old fashioned bank run.

Fri, 08/24/2012 - 03:04 | 2732846 francis_sawyer
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 "The legend lives on from the Chippewa on down
Of the big lake they called 'Gitche Gumee'
The lake, it is said, never gives up her dead
When the skies of November turn gloomy..."

Fri, 08/24/2012 - 05:56 | 2732947 JPM Hater001
JPM Hater001's picture

So hard landing it is...on iron.

Fri, 08/24/2012 - 06:14 | 2732959 Doubleguns
Doubleguns's picture

Notice the wealthy chinese are fleeing and buying homes outside of china. Call that the insiders selling shares.

Thu, 08/23/2012 - 22:53 | 2732559 philipat
philipat's picture

Why would I invest in any country that is only now going to grow at 7.5% pa, when I can invest in Europe, the US, Treasureis etc.

No, wiat...............................

Thu, 08/23/2012 - 23:03 | 2732576 James_Cole
James_Cole's picture

OT - but interesting, looking forward to zh weighing in: http://gawker.com/5937299/inside-mitt-romneys-tax+dodging-cayman-schemes

Fri, 08/24/2012 - 01:27 | 2732752 Rincewind
Rincewind's picture

So you are waiting for somebody to spoon-feed you your opinion?

What's your point in posting this?


Fri, 08/24/2012 - 02:51 | 2732831 James_Cole
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One of the Tylers is pretty good with tax law, would be interesting to hear their take. There's a lot of differing opinions over the advantages / disadvantages of the cayman accounts with main benefit being the foreign investor money. For people who don't have those sorts of accounts it's interesting to get some insight into how they operate, who uses them, what they're good for etc. particularly when it's involving someone who will probably be the next president.   

Fri, 08/24/2012 - 07:23 | 2733035 Buckaroo Banzai
Buckaroo Banzai's picture

Oh for fuck's sake. There's a lot of reasons to dislike Romney, but this ain't one of them.

Meanwhile, Obama is tearing this country to pieces, and the MSM continues to look the other way.

Can't wait until this mummer's farce of an election is over.

Fri, 08/24/2012 - 07:54 | 2733115 bobnoxy
bobnoxy's picture

Yeah, and after all the hard work Bush, Cheney and Rove did to unite the country too!

Being stipid is bad enough. Posting for all the world to see graduates you to imbecile status.

Fri, 08/24/2012 - 08:49 | 2733268 Buckaroo Banzai
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I swear, the next libtard who bleats "it's Bush's fault!", I'm going to punch out his smarmy little fuckface.

And this is coming from a guy who did not like Bush.

Fri, 08/24/2012 - 09:06 | 2733345 bobnoxy
bobnoxy's picture

I swear, the next right wing dumb ass who bleats ''it's all Obama's fault'' I'm going to...well, it's pretty imbecilic to say I'd punch his face given that we're posting to a blog.

And this comes from a guy who didn't vote for Obama, and won't this time around either. It's just that the degrading comments about him usually border on the moronic, like yours.

Just how is he ''tearing the country apart''?

Fri, 08/24/2012 - 11:21 | 2733952 FeralSerf
FeralSerf's picture

It's Bush's fault that Obama is President. Punch away, conman.

Fri, 08/24/2012 - 11:21 | 2733956 carbon
carbon's picture

good post, i am thankf fully to ZH,lots of people are over tensed  and scared, how things are. TODAYS fox news flash ! ABOUT OBAMAS HOPE AND CHANGE, only 29 percent said it was for the better. 

Fri, 08/24/2012 - 07:04 | 2733014 Colonial Intent
Colonial Intent's picture

Without the use of tax havens america would not be where it is now, be thankful that those hi-iq boys on wall st knew what they were doing or those tax havens could have been abused by unscroupulous and nefarious characters!


Thu, 08/23/2012 - 22:55 | 2732563 Silver Bug
Silver Bug's picture

Faber has been spot on with his predictions over the last decade.



Fri, 08/24/2012 - 05:21 | 2732873 slewie the pi-rat
slewie the pi-rat's picture

we were discussing this here when that fuking graph FIRST broke and china refused the ore it had already purchased from the aussies at the prices it had already struck b/c the price was on the downhill race-course

so marc is not incorrect

just waaaay late with his "amazing" analysis.  as usual

he is in front of most curves;  he is again so behind ours here;  way behind.  as usual

this guy is the reason tyler "inadvertantly" gave his publisher's imprimatur to rPaul isn't he?  didn't tyler do that kissing this moron's ass on HIS "official endorsement" of rPaul which tyler pasted here thatSunday?  or was that some other guy with tyler's lipstick on his glutes?

lotta articles for so late at night tonight too...  we were blogging past along at the 250 mark on this piece and approaching 10K hits  Republicans Consider Returning To Gold Standard: Real Or Red Herring?

 10PM new york and BOOM!  5 articles over the top of ripping the shit outa mittens with:

  1. SEC
  2. solar cycle
  3. military spending
  4. law enforcement and
  5. this bullshit

covered the string in fairly rapid-fire succession for this time0'night doncha think?  too bad we can't get this kinda room sevice on the weekends?

hi there, marc!  how's the mittens work coming along?  paying good for everybody to push push push?  goooood!  we're happy yer doin soooo well.  so far.  as usual

what a brilliant mind!  a 40-year chart showing iron ore as money?  got zinc?

i think the toboggan-run started early lastSpring, didn't it?  BHP cut back its port expansion in australia in june

thanks so much to tyler and marc!

Fri, 08/24/2012 - 06:54 | 2733003 Colonial Intent
Colonial Intent's picture

I think tyler(s) should tell their backers to get lost and refuse to declare for romney, think of the (self) respect they would gain.


Fri, 08/24/2012 - 06:23 | 2732966 neidermeyer
neidermeyer's picture

FWIW I usually get delayed at a Florida Central Railroad crossing near sidings where they asemble individual cars into trains ... it used to be that the majority of cars were filled with iron scrap ... lately (as in for the last several months)  the trains have been short enough where they don't impede traffic at the crossing near the yard.


As an aside I now see signs for people buying scrap cars at all time highs ,, usually around $350-$400 ... the only way to make money on cars at that price is the PM's in the catalytic converter... (my car has 4 cats!)  

Fri, 08/24/2012 - 06:46 | 2732991 rsi1
rsi1's picture

there is one little difference between iron ore and the three before, retail investors! the suckers, those are not buying iron ore and are unlikely to know what it is and ever buy it.. so its not a bubble, it might fall, but there is no euphoria.

Fri, 08/24/2012 - 07:27 | 2733046 Buckaroo Banzai
Buckaroo Banzai's picture

Good point.

Fri, 08/24/2012 - 03:02 | 2732836 Element
Element's picture


They broke down in 2008 as well ... and look how that turned out just a year later.

The question is, will people want commodities in 2 to 3 years environment?

I think it's a pretty clear case that they will. 

Iron ore most likely will not peak again soon though.


Fri, 08/24/2012 - 03:03 | 2732839 Cyrano de Bivouac
Cyrano de Bivouac's picture

Not good for Australia definitely.

Fri, 08/24/2012 - 03:07 | 2732844 Element
Element's picture

Why?  The same sort of international economic situation led to a massive boom in 2009 as money looked for a safe place to invest big, to buy real bulk high-grade inputs to industrial production processes, cheaply with good supply terms and reliability.

And it'll more or less happen again this time.

Fri, 08/24/2012 - 06:45 | 2732989 youngman
youngman's picture

Also Quantas cancelled a big order with Boeing for long range planes....the reason..they do not see the future as expanding as much as they thought...not next quarter...these are 10 year purchases....they see world travel slowing down for the next ten years....

Fri, 08/24/2012 - 12:16 | 2734155 GeezerGeek
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Reminds me of California salivating over the Facebook share prices at IPO. Boo hoo.

Fri, 08/24/2012 - 03:17 | 2732853 Peter Pan
Peter Pan's picture

As an Australian I am also concerned that 50% of our income is derived from iron ore and coal and that 50% of our exports go to China and Japan. A truly diversified economy.

Our biggest problem is short sighted politicians........oh wait........ I forgot that's the problem everywhere.

Fri, 08/24/2012 - 11:30 | 2733995 FeralSerf
FeralSerf's picture

It may be about time for the AUD and the rest of Oz to roll over.  You've had a good run mate, but it's about time to change horses.

Thu, 08/23/2012 - 22:03 | 2732442 ACP
ACP's picture

Iron, bitchez?

Fri, 08/24/2012 - 06:22 | 2732963 zhandax
zhandax's picture

CME doesn't have an iron ore contract (steel only).  The most un-manipulated data available.  The people with an iron ore contract are (strangely enough) the people who were buying it.

Thu, 08/23/2012 - 22:13 | 2732445 Cult_of_Reason
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Steel Prices Fall to Lowest Level in Three Years (China)

Domestic steel prices fell to 3,670 yuan ($583) a metric ton on Aug 21, the lowest level in three years, according to a report in the Economic Daily.

Major Chinese steel producers lowered their steel prices in September based on the falling prices in August. The steel industry is still registering losses and investors lack confidence.



Iron Ore Breaking Down


Thu, 08/23/2012 - 23:54 | 2732659 otto skorzeny
otto skorzeny's picture

at least the geniuses at FoMoCo are going to build a lot of truck body panels out of aluminum to wring another 1 mpg out of their gas-sucking F-Series pickup trucks-of course that will "only" add another few thousand dollars to the cost of the truck.

Fri, 08/24/2012 - 00:05 | 2732670 DoChenRollingBearing
DoChenRollingBearing's picture

Maybe that means bearing prices will start to come down soon.

Fri, 08/24/2012 - 01:45 | 2732777 knowless
knowless's picture

have fun sourcing materials when upstream cant make payroll.

Thu, 08/23/2012 - 22:09 | 2732448 vertexa
vertexa's picture

Marc Faber warns of 100% chance of global recession: Germany into recession soon, corporate profits will disappoint over the next 12 to 18 months, and who wins the election won’t matter!

Thu, 08/23/2012 - 22:14 | 2732455 Cult_of_Reason
Cult_of_Reason's picture

"Greece was warned last night it has one ‘last chance’ to avoid bankruptcy as allies of Angela Merkel made clear she does not care if the country drops out of the euro.

The ultimatum was delivered by eurozone boss Jean-Claude Juncker as a week of crunch talks over the fate of the single currency started..."


Fri, 08/24/2012 - 07:52 | 2733111 NEOSERF
NEOSERF's picture

Ultimatums lose a little bit of their oomph when you are on number 3 or 4 or 5....

Thu, 08/23/2012 - 22:18 | 2732467 kito
kito's picture

Jim rogers is boots on the ground....still bullish as ever on china....

Thu, 08/23/2012 - 22:23 | 2732490 fonzannoon
fonzannoon's picture

i did not junk u but Rogers is bullish long term not necessarily right now. he claims he owns usd right now.  i know because i saw him on cnb....nevermind

Thu, 08/23/2012 - 22:45 | 2732543 Dr. Engali
Dr. Engali's picture

You better be careful watching that channel. I've heard tales of rational thinking people's heads spontaneously combusting watching the propoganda coming out of there.

Thu, 08/23/2012 - 23:09 | 2732585 kito
kito's picture

oh lordie fonz, you promised to kick the cnbc habit......that station will give you nightmares.....and rogers continues to say that he buys as much renminbi that he can get his hands on........sorry, but when this all goes down.....whenever that be.....max keiser just made a bold call for april of next year.....i digress............china will be in a much better position than any of the other major countries.....fonz, you live in manhattan ( i presume)....head down to the bank of china in chinatown, open a renminbi based account.....throw a couple of benjamins in there....and watch how your savings multiplies like chia pet hair over the next decade..............

Fri, 08/24/2012 - 01:29 | 2732759 Bay of Pigs
Bay of Pigs's picture

okay doelarr bull....please tell us how that 1350 gold short is coming? 

yeah, keep yapping.

Fri, 08/24/2012 - 01:58 | 2732790 knowless
knowless's picture

currency swaps will magically save the day. just arb the fuck out of something, the exploitable misallocations will continue to exist, even if in shorter duration.. preservation.

Fri, 08/24/2012 - 10:05 | 2733605 kito
kito's picture

Bay...you getting tough because gold managed to get off the rocking chair this week???......

Fri, 08/24/2012 - 03:32 | 2732868 Peter Pan
Peter Pan's picture

Jim Rogers bullish on China?

Right now I think it's a bull in a China shop.

Thu, 08/23/2012 - 22:59 | 2732572 reader2010
reader2010's picture

Jim Rogers is in TV Show Biz these days.

Fri, 08/24/2012 - 00:35 | 2732696 Yardfarmer
Yardfarmer's picture

remember, bow tie daddy got his start collaborating with George Soros.

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