Murchison launches $1b bid for Midwest

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Murchison launches $1b bid for Midwest
11 October 2007 - Melbourne Australia

• Murchison bids AU$1 billion for Midwest
• Home loans drop due to interest rate rise
• Telstra to switch on 211 broadband exchanges
• Westpac confident RAMS deal will move forward
• ASX could hit 7,000 by Christmas

After failing to convince Midwest that a friendly merger was the way to go, Murchison Metals has made a bid for the company valued at approximately AU$1 billion. The move has been seen by some as an attempt by Japanese interests to head off the Chinese in the race to open up WA's lucrative Mid West. The most recent interest rate rise, coupled with low housing affordability, caused a drop in first-home buyer loans and investor led construction in August. Telstra has met the federal government's deadline and agreed to switch on 211 ADSL broadband exchanges, meaning that all Australians will now be able to access broadband internet. Westpac boss David Morgan has expressed confidence that the bank's proposed acquisition of RAMS will go ahead. Meanwhile, the All Ordinaries and ASX 200 were setting new highs again yesterday, prompting some analysts to predict the market will pass 7000 before Christmas.

All the details below...

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Japan v China for WA iron ore
In what is being seen as a battle between Japanese and Chinese interests for access to West Australian iron ore, Murchison Metals (ASX:MMX) yesterday launched an AU$1 billion bid for Midwest Corporation (ASX:MIS). Murchison, backed by Japanese company Mitsubishi (TYO:8058), made the bid after failing to convince Midwest – backed by Sinosteel – that a friendly merger was the way forward. The companies have different plans on how to open up WA's lucrative Mid West region.

Home loans plummet as housing moves out of reach
First-home buyer loans and finance for investor-led construction dropped substantially in August, as a hike in interest rates and a lack of affordable housing took their toll. Nationally, housing affordability may be at its lowest since interest rates hit 16-17% in 1989-90.

Coonan makes another U-turn
Telstra has agreed to switch on 211 ADSL broadband exchanges around Australia, meeting Communications Minister Helen Coonan's deadline for signing off on approximately AU$40 million in funding for the project. The company's solicitor also wrote an open letter questioning Ms Coonan yesterday, after she said that the federal Government would consider using taxpayer monies to fund a fibre-optic network to Australian homes.

Westpac bid as good as it gets for RAMS
Westpac (ASX:WBC) chief David Morgan has said that he is confident the bank's bid for distressed lender RAMS (ASX:RHG) will be successful, as a rival bid is unlikely to emerge. Mr Morgan also said that the trouble surrounding RAMS is an isolated case.

All Ords on track to crack 7000 before Christmas
The All Ordinaries set a new intraday high of 6667.6 yesterday, with BHP Billiton (ASX:BHP) and Rio Tinto (ASX:RIO) playing a significant part in the index's climb. Analysts say that the market could reach the symbolically significant 7000 mark before Christmas.

All the best,

Chloe Wilson

Gold Breaks Out, But How Many Benefit?

Gold Breaks Out, But How Many Benefit?
By Chris Weber

I've been noticing a strange thing.

I sometimes meet with readers of my letter, the Weber Global Opportunities Report. Occasionally, they hire me to go over their holdings with them (the only way I can really give good advice is when I know the person and their complete situation). Some I meet at conferences, and even sometimes on trips.

But the strange thing is that with every one of these readers I've come into contact with since the first of the year, they either have very little exposure to the gold and silver area or – in more cases – none at all.

I wonder, they pay to read my opinions and what I am doing, so they must value what they read at least somewhat. In some cases, they actively don't believe gold is going up.

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"Why do you really think this?" is how one put it. Or they think it is going to fall before it rises, and maybe then they can buy it cheaper. "Gold will go to $540 before it goes to $740," said another with great confidence. (He'd never bought any.)

But one blamed me. "You don't seem positive enough about it in your letter, always saying that you may be wrong." Well, I don't know how much more positive I can be. I do enter into almost every investment with the view that I could be wrong, and I try to protect myself in case I turn out to be.

But I say "almost" every investment. I may take my principal out on stocks and even currencies, but I have not done so on my physical gold and silver. This alone should tell you that I don't regard them in the same light. I am willing to risk all of my prior profits because I believe we are still in the early phases of a huge bull market in the precious metals.

I suspect this person who blames me that he doesn't have any metals is the type who usually blames others for his mistakes. But he may have a point. I don't jump up and down and dramatically scream that you should do anything.

There was an advisor back in the 1970s during gold's last bull market. He was famous for saying, "Mortgage the home, mortgage the kids, but buy gold and silver." That's dramatic. Well, he was right. But like so many others, he stayed too long at the party and did not get out or get his readers out at anywhere near the peak.

Maybe I'm too superstitious. I approach investments with maybe too much humility, "rendering to the gods what is theirs." I've always found that the less fanfare you announce something, the better the chances are that it will work out. Anyway, it's not my style to scream and say "GET INTO GOLD AND SILVER NOW!!!"

I can only tell you what I have done, and what I think will happen. I've repeatedly said that my target for gold was $3,000 per ounce and $187 for silver.

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However, for so many readers not to have any makes me think I am not getting the point across. But then, I think that every bull market takes as few people with it as possible.

The activity gets heavy only just before the bull market makes a temporary high and gets severely overbought. This happened in the weeks leading up to the May 2006 highs. Then, when the market corrects, these latecomers get out in a panic.

But many others never get on until near the very end. This may be what I'm seeing. And with so few people owning gold or silver, it makes me think that we are still very close to the start of the bull market, and not near its end.

Good investing,

Chris Weber

Editor's note: Chris Weber is hands-down one of the best investors we've ever known. In over 35 years of investing, he has never had a losing year.

Right now, Chris is recommending three little-known ways to play the bull market in gold and precious metals - and also a savings account that yields double-digit returns annually. If you're interested in learning more about where Chris is putting his money, click here for the details.

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