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Vol. XIV No. 17
Friday April 28 - May 4, 2006

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Updated every Friday
by Saichon Paewsoongnern

 

 

COLUMNS
HEADLINES [click on headline to view story]:

Money matters

Snap Shots

Modern Medicine

Heart to Heart with Hillary

A Female Perspective


Money matters: Why you should invest in commodities

Part 1

Graham Macdonald
MBMG International Ltd.

Considering that people depend on commodities every day of the week it is somewhat surprising that so few actually invest in them. Whilst most will contemplate putting money into equities and property hardly anyone will think about foodstuffs, metals, energy products or things for making clothes – basically everything you need to survive on this planet. Long term readers of this column will know that we have been bullish on commodities, and especially gold, for quite a while now.
Every so often though, commodities force their way to the fore. When raw materials are in great demand and supplies are not what they should or could be then prices go up through the roof.
As anyone who takes a look at the Financial Times commodity page can see, commodities have done rather well over recent times and it is safe to say that the bull market is going to be with us for quite a while. The really good news is that when a commodity bull market appears then it is with us for quite a while. Over the last two hundred years there have been five bull markets, the shortest of which lasted fifteen years. This one, if you look at when commodities last bottomed out, started in 2001. Just out of interest, the longest one continued for over 40 years.
So, whilst it may be tempting to cut back on exposure to commodities the opposite is true. Joanne Baynham, the head of fundamental research at Miton Optimal says that the commodity “cycle has still much further to go”.
The reason that commodity bull markets last much longer than those driven by direct money is the old A-Level Economics conundrum of supply and demand. When demand is on the up then supply lags behind because there has been no recent investment in research, maintenance or purchasing new equipment. It takes years for supply to catch up as it cannot be increased overnight.
Taking up Joanne again, she stated in a recent article that “investors will increasingly shift their focus on the supply side of the equation in 2006”. We would definitely expect to see a surge in merger & acquisition activity as the big miners buy out smaller exploration companies. This is a good short term answer but does not solve the longer term fundamentals whereby the fact is that there are only a finite number of smaller companies out there and someone, sometime soon is going to have to bite the bullet and invest in exploration themselves. But the important thing here is that the longer they hold out for short term profit and ignore long term gains then the longer the commodity cycle will go on.
Also, the mining companies have to look at the short term returns for their own shareholders. BHP Billiton has gone on record and said, “Industry wide, the supply side response to continued strong global demand for new materials remains constrained by a shortage of people, equipment and supplies.” This has led to tight labour markets and difficulty in sourcing construction and drilling plant and machinery, which in turn has led to rising input costs. Credit Suisse First Boston states that to justify a return in investment on a new copper mine, the long term copper price needs to be around USD1.50 per pound compared with current industry thinking of USD0.90 per pound. There is a similar thinking for nickel, zinc and platinum. However, despite all of this, people need all of the above in ever greater quantities at the moment and this is why they will do more than hold their own in the markets over the next few years, especially when companies like Caterpillar come out and say in the Financial Times, “mining equipment is sold out through 2007 and that the cycle has legs and looks stronger than the upturns in the 1980’s and 1990’s”.
Currency strength against the US Dollar is also adding further pressure. With the onset of a weak US Dollar in 2002, commodity currencies began to grow stronger and strengthened even more when physical commodity prices started to go up in 2004. Currencies such as the Rand, Chilean Peso and Australian Dollar have appreciated by between 25% and 50% since 2002.
We can also look at oil. Just think that one billion people live in the developed world and, out of the remaining five billion, over two billion live in two countries – India and China. These two nations are playing catch up with the West and need as many commodities as they can get their hands on – especially oil. However, the problem here lies in two factors. Firstly, there are not enough refineries in the world to process what we are producing at the moment. Even when there are, then the demand curve will have increased even more. Also, the lack of development in new large oil fields has been very obvious over since the early 1980s. This means that even if one is found tomorrow then it will take years to get everything necessary in place. So, unless there is a large investment in the basic infrastructure of oil and all that goes with it then the world will be continuing to play catch up for many years to come.
To be continued next week…

The above data and research was compiled from sources believed to be reliable. However, neither MBMG International Ltd nor its officers can accept any liability for any errors or omissions in the above article nor bear any responsibility for any losses achieved as a result of any actions taken or not taken as a consequence of reading the above article. For more information please contact Graham Macdonald on [email protected]



Snap Shots: Help! I’ve been framed!

by Harry Flashman

Imagine if you had one or more of your photographs framed and hanging in an art gallery somewhere. You would probably think you had “made it” as a photographer, and could sit back with justifiable pride. However, you do not need to have your work accepted by some exclusive gallery somewhere to get that warm inner glow. You can do the same from the comfort of your lounge room.
There is a certain type of photo which is suitable for framing and hanging and I like to call these kinds of photographs “wall art”. This is something any photographer can achieve, without any special equipment or even special training (other than reading this article, I suppose). The secret is in thinking color as well as the subject, taking your time to compose and then sitting back and letting your local photo-shop do the rest. Here’s how.
Take a look at the photograph with this week’s article, and you will soon see that this could have easily been taken by you. No tricky exposure details either. Whilst I usually run my camera in ‘Manual’ mode, for this exercise I let my Mr. Nikon do the work instead, sticking it on Auto mode, just to see what would come out. If you can view this page in color, you will see that it worked fine. (Go to the web version of the paper and it’s in glorious technicolour!)
This photo was taken of a Halloween pumpkin that was sitting on the bar at a pub. By getting up close, the candle light of the pumpkin was enough for the photo, so the flash was not used, which in turn gives it that predominantly orange color. The end result is an eye-catching orange object on a black background. There is a red candle in there too, but orange is what hits the eye.
Since the object of the exercise is to end up with a photograph you can hang on the wall, get as close as possible to the subject – make it fill the frame! The pumpkin almost does that, doesn’t it?
However, make sure that you are not too close for the camera to be able to focus. With compact point and shooters you may have to do some rough estimations of how close you really are. With SLR’s you can directly see if you are in focus. It is always safer to be a little further away, but still in focus, than too close and ‘soft’ and blurred.
The secret is to very much decide just what is the ‘hero’ in the image and get close enough to ensure the ‘hero’ is not swamped with annoying and distracting other details.
The next job for the budding wall artist is to select the best image (be that print or digital, it makes no difference) and return to your local friendly photoshop and ask for an enlargement. While 10x8 (inches) is easily done, called an 8R in the trade, for wall art I think you should look at 11x14 or even larger, if the image is sharp enough. Size does matter, don’t let them tell you anything different! With the larger prints you will have to wait a couple of days to get the print back.
Remember too that is you have not been able to get close enough at the time of capturing the image, you can get the photoshop to crop, to make the central image dominant. However, you will lose some sharpness by this method.
Now there is the (not so) simple matter of the frame. Do not fall into the trap of trying to make your art look larger and more imposing by having a larger frame. All this does is take away from the subject matter. Those awful gold, ornate frames are definitely the worst. Go into any of the art galleries around and see what the artists have done. The vast majority will display their work in very simple frames (or even no frame at all, just the canvas).
Since the photo I have chosen here is orange on black, I would frame this with a narrow orange matte and a thin black frame around it. In this way you are accentuating the orange on black of the image. Great wall art!


Modern Medicine: And a pox on your chickens!

by Dr. Iain Corness, Consultant

With Bird Flu from chickens being the medical press buzz words at present, I felt that this week we should review another chicken disease. Chicken pox!
Of course, chicken pox (AKA Varicella) is not really caused by chickens, nor even carried by them. Chicken pox is a common disease caused by the varicella zoster virus which is a member of the herpes virus family. It is very contagious and all communities experience epidemics.
A couple of years back there was a real outbreak in Thailand, with 22,833 patients with the complaint between January and May. This nasty condition never actually leaves the community, lying quiet for a while and then attacking in epidemic proportions. Make no mistake about this one, it is a most aggressive disease that sweeps through schools and institutions and while generally a disease of children, it can attack adults too with devastating results.
The varicella zoster virus is known for the characteristic chickenpox lesions. These come out very quickly after an initial period of vague symptoms such as fever and aches in muscles and joints. The lesions (vesicles) are very superficial on the skin and grow like a mini-Vesuvius, burst and then crust over. That cycle of events takes around four days, but new crops of vesicles come up in waves in the first three or four days, so you can have some vesicles growing bigger while earlier ones are drying up and crusting over.
The vesicles generally come out on the trunk and face first, but can spread to all over the body and even inside the mouth and on the tongue. Now while scarring is always a worry for the Mums of this world, there are far worse effects from this little virus. There is a distinct possibility of an encephalitis in older children and adults can actually develop a varicella pneumonia. Pregnant women who get chickenpox also run the risk of infecting the unborn child, and this can run as high as 10 percent. Very often, especially if the child scratches the lesions, there can be an added infection by an opportunistic bacterium on top of the viral lesions, so you get a double problem.
So what do you do when chickenpox is doing the rounds? The first thing is to keep away from those who have the disease. It is highly contagious and is spread by inhalation of micro droplets in the air, or by direct contact with weeping vesicles. In a family, this means that little Johnny gets his own towel that no-one else must use and a bed-time kiss is strictly forbidden.
Calomine lotion does help with itchy and weeping vesicles and trim the fingernails in young children to lessen the chances of scratching. With very little ones, I even suggest putting their hands in socks, just as you do with little babies.
If the temperature is raised (more than 37.5) then a little paracetamol will help (but not aspirin as this drug should not be used with children), and if there is the “super-infection” by a bacterium it will be necessary for your doctor to prescribe an appropriate antibiotic.
The other important duty that you have as a parent is do not send little Johnny back to school until the very last vesicle has dried up. This is generally around a week to ten days, but is so important in trying to stop the epidemic.
The other nasty part of this virus is that it lies dormant in your system and can strike back many years later as Shingles, or as we medico’s call it, Herpes Zoster. No, chickenpox is not fun, and to those of you who are struggling with it right now, you have my sympathies.
However, we do have a varicella vaccine these days, and vaccination is recommended from about 12 months of age. Like all vaccination programs, this will radically reduce the impact of epidemics.


Heart to Heart with Hillary

Dear Hillary,
Everyone else seems to be having their say about double pricing in Thailand, so let me have mine, please. I know that the readers letters section is where most of the complaints go, but I think there is more sense in your column than in many of the others. People at least read your stuff, Petal! We all know that double pricing exists all over Thailand, from national parks, baht busses, tourist attractions etc, and it doesn’t happen in the UK, but since the tourist can afford it, and it is still cheaper than similar attractions, or taxis in his home town, what’s the beef? For sure the local Thai people can’t afford the higher price, so that’s why there has to be two scales of charges. What do you think, Hillary? Am I right or not? Or is this too simple for people to cotton onto?
Double-price Dave
Dear Double-price Dave,
You have sort of got it right, my Petal. Thai wages are such that many Thai families could not afford to get into some of Thailand’s spectacular attractions like the glitzy transvestite shows, for example, if they had to pay the tourist price. Where everyone has got it wrong is this thinking that the tourists are having to pay double. They don’t. Look at it this way, for a moment. The tourists are actually paying the “standard” price, whilst the Thais are enjoying a 50 percent discount. I think that if the price structure were plainly stated as that, nobody would object. Having said that, I am in complete disagreement with the sneaky way used by some entrepreneurs to advertise their “Thai” prices by using Thai numbers, hoping that the foreigners cannot understand the notice. A little honesty would quickly defuse the situation, and the resultant anger, brought on by “double” pricing. I do not believe that you can use the same principle that Thais when they travel to the UK for example, pay the same “standard” price as the locals, therefore visitors here should pay the same as locals. Thais who travel to the UK are not the Thais who go to national parks here with their children for the weekend. Those Thais could never afford an overseas trip, like the foreign tourists who come here.
Dear Hillary,
You really must take care when accepting gifts of chocolate and champagne from Antipodean types. A “decent bubbly” will probably be a well shaken ice-cold tinny and a box of soft-centres may have been gathered from the rear end of a koala!
Mistersingha
Dear Mistersingha,
I am so glad to see that the medications must have started to kick in, and you have recovered your powers of rational thought, and in English too! What a bonus, my Petal. However, I do think you have to be careful when you (especially you) point the finger at anyone. Your concept of a “decent bubbly” which you dropped off was Californian “champagne” and was called “extra dry” with a warning on the label that it contains “Sulfites”. This is hardly a bottle of Krug or Veuve Cliquot, is it now? Your box of ‘soft centers’ was a 10 baht packet of Rocklets. Choclatey enough, but hardly soft centers, are they? I have never tried koala droppings as you apparently have, so cannot comment on the Rocklet versus koala poo comparison.
Hello Hillary,
It is quite a while since I last contacted you. In fact I think it was when I dropped off your Champagne and Belgium chocs. A lot has happened since then; I have bought a house in Thailand, and a car. I gave up looking for an honest car dealer as when I returned to a couple of dealers to look over a car I fancied, to find they had disappeared, no cars just an empty lot. I landed up buying one from an English guy who was selling up and going home. I hope you did not get too wet over the Songkran period.
Man Looking for an Honest Car Dealer
Dear Man LHCD,
Thank you again for the champers and chocs. You are really a proper gentleman, and I’m sorry that a nice man such as yourself had a needless problem buying a car here. Mind you, it is the same all over the world. Used car salesmen do not enjoy a reputation for honest dealing, do they. Yes, I stayed dry over Songkran, other than on the last day, when I went out and got white pasted and wet with the rest of my street. Being based in the outlying suburbs, we were spared the loutish and aggressive behavior exhibited by many of the tourists in the touristy areas. Accidents and injuries result from much of this and it is all so inappropriate to use Songkran as the excuse. It was always a peaceful festival.
Your other query (not printed because of space problems) I have referred directly to the man in charge, as I know nothing, or even slightly less about electronic media transmissions. That’s why I drive an automatic car, Petal. I am glad you are enjoying life over here.
 


A Female Perspective: The Pianist

with Sharona Watson

Some weeks ago I wrote about the joy of being asked to become a Godparent. On Easter Sunday, I found myself in a place which I don’t always find comfortable – a church – as together with the other Godparents, we gathered with our Godchild Hannah and her parents for her Christening. The clouds had parted over the northern English industrial town of Leek, allowing the sun to peak out for seemingly the first time in ten days and thaw my freezing body, slightly. Born on Christmas day, Hannah’s was an extraordinary baptism in many ways. Not least, because her father is a Christian, her Mother a Muslim and her Godparents represent a spectrum of global diversity; Muslim, Hindu, Jew, Buddhist and Christian. It was, as Andy said, “As Jesus would have wanted it.”

Emily Segal: Living with music
Afterwards, we travelled south to London, where I had an appointment with a woman of whom I had heard a great deal. Emily Segal is a concert pianist of global reputation and co-founder of one of Europe’s fastest growing music festivals in Nuremberg, Germany, where until last summer, she lived for six years with her husband, the somewhat corpulent conductor Peter Selwyn, and her two children, Martha and Dan. Had she found it easy, combining the roles of female professional pianist and mother? “No. I’ll give you an example. When I had my first child, at a concert as part of Jaqueline du Pré’s memorial celebration, I had to breast feed between movements, not on stage, by the way, unfortunately for the audience. I think it’s very, very difficult because so much of music involves travelling. It’s very difficult with a family.”
What I found incredible is that Emily has decided to re-train to become a teacher. One of the main reasons for this is to provide some kind of stable income, however paltry it might be, to sustain her family. I caught her attempting one of a series of ridiculously difficult and apparently necessary mental arithmetic tests, which all training teachers now have to pass. A lot of people seem to assume that concert pianists are well paid. Apparently not; “Someone once asked me how much I got paid for a particular concert so I told them; a thousand pounds,” laughed Emily, who is very beautiful, by the way. “He thought that was a lot for one night’s work. I mean, apart from the thirty-six years worth of practice, on average I play five to six hours a day, seven days a week. I once worked out that if I was being paid ‘by the hour’ then it would be at a rate of less than half a pence per hour.”
Emily is Jewish and I wondered what it had been like, spending the last six years repopulating southern Germany with Jews? “Well, once a mother came up to me and said, ‘Your daughter has been talking about lighting candles for some festival – what’s that all about?’ and I said, ‘well it’s Hanukkah’ and she asked, ‘well, what’s that?’ I explained that it’s a Jewish festival, at which point she went bright red and walked off. So I went home and proclaimed to my husband, ‘We’re not staying in this country! I can’t do this anymore!’ But he reassured me, telling me that I’d probably just got the wrong end of the stick and that she’d probably never met a Jewish person in her life. And he was right. I saw her the following day and I asked her why she had walked away from me. She said that she hadn’t known what to say. She had been to Dachau, she knew that Germany was responsible for killing six million Jews, that was about it. Actually, she became a good friend. I think one of the main problems is that all German kids learn about is concentration camps (it’s compulsory for them to visit one) so just about the only thing they learn about Judaism is the fact that the Jews walked into the gas chambers. Nothing about Jewish culture, nothing about Jewish history and I think that’s what has to change in Germany. They’ve got to stop flagellating and start appreciating. Actually, I brought the celebration of Jewish festivals back into schools in the area.”
Another of Emily (and her husband’s) passions is their Music and Arts festivals, which happens in Nuremburg each September. What kind of things happen there? “We do six chamber music concerts, involving top performers from twenty five different countries around the world and we do two performances of an opera. We make use of lots of different kinds of venues across the city; for instance, we did Britten’s ‘Rape of Lucretia’ in Hitler’s private chamber, the first time it had been used for a performance, which was a wonderful idea because the opera is all about the abuse of power. Also, we introduce English music that hasn’t been heard in Germany before and then we do a huge education project. (As Emily’s eyes lit up perhaps I understood a little more about why she is determined to become a teacher). Last year a hundred and fifty children performed Britten’s Noah’s ark in a specially built circus tent in the zoo and this year, our project involves five hundred children from Prague, Nuremburg and Hackney in London, using poems from children of the holocaust. I think it’s going to be an amazing event.”
At this point, I was delighted to hear of Emily’s enthusiasm for a trip to Thailand, hopefully to perform in one of those magnificent Opera evenings in Pattaya, arranged by impresario Khun Mongkol Chayasirisobhon. “That would be wonderful” said Emily, “But it would have to fit in with half-term!”
The way Emily talks about things she loves, you can feel her passion. She has played the piano since the age of five and her house is full of manuscripts and instruments. No surprise then, that music means a “helluvalot” to her. In fact, without any sense of melodrama, she added, “I couldn’t live without it.”
Next week: A Different Tune
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