Back in March 2001, about a year before the start of the so-called commodities supercycle – an event that would blow off across the 12 months commencing mid-2007 – BHP Billiton ranked as the world’s No 2 mining stock, by market value, after Alcoa, the US-based aluminum giant. Today, BHP Billiton has long ranked as the world’s biggest, in all senses, diversified resources stock; Alcoa has slipped to No 31 among global mining groups.

For investors, the different roads followed by these two, and many other, mining groups have had profound results. In early 2001, BHP Billiton commanded a market value of around US$28bn. That soared nearly ten-fold by the middle of 2008, and after recovering following the great 2008 markets scare, today sits around US$189bn, well ahead of No 2, Vale, the Brazilian supergroup that can overwhelmingly attribute its success to specialising in iron ore.

Even that dynamic has changed; in early June 2009, Rio Tinto and BHP Billiton announced that BHP Billiton would pay Rio Tinto US$5.8bn “for equity type interests at financial close” to take its interest in the two companies’ Pilbara, Australia iron ore joint venture from 45% to 50%.

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The London-based VM Group’s latest monthly analysis of the global Metals and plastics sectors, prepared for BNP Paribas/Fortis Bank, takes a pretty positive view of the year ahead for most metals – that is if you’re a producer or investor rather than a consumer!  Of course China is the key to all this as although there may be signs of a pick-up in OECD economies, and thus metals demand , as the year continues but, as they put it it is “China’s rapacious appetite for base metals has shaped this market throughout 2009”.  They reckon that without China most industrial metals prices would be languishing at around half their current levels.

And, they reckon the China factor will continue through 2010 with the Chinese government’s indication that it will maintain a relatively loose monetary policy through the year and they point to Chinese 2010 growth forecasts of upwards of 9%, which will keep metals demand strong.  The other BRIC economies may also contribute and they conclude that “the year ahead is unlikely to see much price weakness for base metals – if anything, the reverse.”

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Russia’s state repository will sell 30 tonnes of gold worth $1 billion to the central bank next week, a source at the body said on Friday, keeping the metal inside Russia after rethinking a plan to sell it on the market.

Central banks worldwide are building up their gold reserves as the metal trades near record highs. Gokhran, the Russian repository, cancelled plans to sell the gold on the open market after information about the sale leaked.

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With bullion prices at all-time highs and world-class gold discoveries becoming ever more elusive, the investment industry is gambling increasingly sizeable sums of money on major mines-in-the-making. A recent example of this new trend involves Exeter Resource Corporation (TSX.V: XRC) (NYSE-A: XRA). Specifically, a handful of top-tier investment banks snapped up the high-flying mining junior’s CDN $57.5 million equity financing last month in less than 24 hours.

Of Exeter’s war chest, a sizeable amount is being used to develop one of the world’s largest gold discoveries in recent years. The Caspiche gold/copper deposit in Chile is a veritable monster that weighs in at 33.7 million gold ‘equivalent’ ounces. (This ‘equivalent’ metric involves silver and copper by-product metals that are valued using baseline prices of US $12 for silver and US $2.00 per pound for copper, while US $800 is used for the gold valuation). Stated another way, Caspiche boasts an inferred resource estimate of 19.8 million ounces of gold, 40 million ounces of silver and 4.8 billion pounds of copper.

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“The United States Mint has depleted its inventory of 2009 American Buffalo One Ounce Gold Bullion Coins. … No additional inventory will be made available. As additional information becomes available regarding 2010-dated American Buffalo One Once Gold Bullion Coins, you will be notified.”   So said a memorandum issued Friday to authorized purchasers of U.S. Mint gold coins and reported by Jim Sinclair..

Mineweb reported only two weeks ago, on November 25^th, the suspension of sales of American Gold Eagle coins by the Mint – U.S. Mint suspends American Eagle 1-ounce gold coin sales – again, which, at the time, reckoned such sales would be resumed early this month – but in the event, not only is the suspension of the Gold Eagle coin sales continuing, but also now the American Buffalo one ounce gold coin sales have also been suspended, with no new sales now planned until some time in 2010 – although the current sharp fall in the gold price may provide the Mint with a bit of respite from its supply/demand woes.

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• Barrick Gold: Here’s Why We Eliminated Our Gold Hedges, Just As The Marked Started To Peak (ABX)
• Did Barrick’s De-Hedging Call The Top In Gold? (ABX)
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Rising dollar commodity prices, generally from low points in the early stages of this year, are now seen by some commentators as possibly running into bubble territory, as, effectively, a one-way bet against the dollar. Dollar gold bullion, for one, has made fresh all time records within the past 24 hours, at more than US$1,200 an ounce. Commodities enjoy broader support, as reflected in the majority of world stocks exchanges trading at or close to the highest levels this year.

For speculators on the dollar commodity price train, the ceiling is yet to be reached, according to analysts at the Bank Credit Analyst, which reckon that “the dollar is not technically oversold and fundamental factors for a bottom are still not in place”. Seen over the longer term, the dollar index recorded a bull market from 1995 through 2001. It has been in a protracted bear market since, but at current levels, is above multi year lows seen in April 2008, when it measured 70.70 points, the lowest since inception in 1973.

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De Beers, ranked No 1 miner of rough diamonds, has confirmed ongoing speculation that it is actively seeking additional funding of around US$1bn from its three shareholders. If that amount is provided, by way of loans or fresh equity, the proportional contribution would be US$450m from Anglo American, US$400m from the Oppenheimer family, and US$150m from the Botswana government.

In line with most commodity prices, rough diamonds plunged into a trough around mid-2008. Most prices have recovered well by now, but it seems that diamonds remain somewhat behind the curve. At De Beers, however, a culmination of disparate factors have left what was one of the world’s most influential miners on its proverbial cash flow knees.

De Beers, a private company, publishes limited financial data, but enough to show that in the past three-and-a-half years, it has generated negative free cash flow (operating cash flow less capital expenditure) aggregating at minus US$864m. Part of the explanation lies in significant capital expenditure, at US$1.2bn in 2006 and US$1.5bn in 2007, mainly dedicated to building new mines in Canada.

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