TC is going down today due to fear of the fiscal cliff. If congress doesn't resolve the fiscal cliff and taxes go up on everyone, less money supply for spending and investment will lead to some deflation and gold and copper and moly prices will fall because the dollar will get stronger because the world will be more confident that we are trying to address our debt issues. To me, this is a bigger risk to TC than financing concerns anymore. By purchasing TC, you must believe that the fed will keep printing and that the fiscal cliff will be avoided which means you are betting that congress will work out a deal. Thoughts?
The Fed is not the only central bank that is easing. So are the ECB, the Bank of England, the Australian Authority and the Bank of China. Gold prices are also supported by net purchases of gold by central banks worldwide (of note is Russia) as they attempt to diversify their reserves.
Today's drop has nothing to do with the fiscal cliff. It has to do with the S&P report on the $350 million dollars in debt. They put a negative outlook on TC. So although TC still remains at a CCC+, it could be lowered to a CCC if things don't pick up soon. They said moly prices are too low, etc. The down market has little to do with it, because TC moved up yesterday despite fiscal cliff fears.
Higher taxes = slower economic growth
Democrat wasteful spending = big deficits = slower economic growth
Slower economic growth = lower moly prices
Lower moly prices = lower TC profits
Moly has been falling all year as the world's usage of moly wanes, as world economic activity takes a hit.
Europe is in the crapper (serious recession) and China's exports are falling off.
At some point, the debt limit will have to be increased, and that will require 'aye" votes from the GOP House of Representatives. They will extract a price from the STUPID DONKEY PARTY.
There is a reason TC wanted to borrow big money. It's to finance operations well beyond the point Milligan is up and running. Hope the debt sells. Am unhappy with the rate, however, your point regarding incremental interest expense is valid. Better to grab the cash now, before the coming crap his the fan.
Expect US recession in 2013.
Defence spending automatically gets cut by 1 trillion dollars per year if the fiscal cliff hits. That is part of the cliff if the politicians can't negotiate. If people are taxed more, then they have less cash and that won't cause inflation (increasing money supply causes inflation, decreased money supply causes deflation), only kicking the can down the road and continued money printing will. If you think that the politicians wont agree and that we are going over the fiscal cliff, gold and copper prices will fall. We will be reverting back to the economics of the Clinton years when gold was $300 per ounce because our currency was so strong. I think this is why TC management is trying to secure debt financing right now, because if the cliff hits, fewer people will be willing to give them money if gold and copper prices are lower.
Interesting notion on this. Fiscal cliff one way or another is going to be good for TC. Why you ask .. well if you havn't been paying attention... Obummer asked for an additional 1.3 Trillion in tax revenue yesterday during his 45 minute Jim + Tammy Baker media praise-a-thon. Did you notice the one thing he did't talk anything about ?,,,, spending cuts. That's right .. spending will continue.. 2 days ago with a jump of 22% in spending in Oct... couple that with Benny and QE-Infinity means inflation will continue upward ... even if we get the Fiscal Cliff .. Inflation = Gold rising / Commodity (Copper) rising ... or look at it the other way.. Over the Fiscal Cliff = US recession = More Stimulus Spending = Gold / Commodities continue upward. Either way.. TC will head up and we longs win.
I think the Lame Duck party of NO will not make a deal with Reelected President Obama and will drive us over the fiscal cliff. Then after the New Congress with many more Democrat members in it and a frightened gop will make the necessary deal to fix things.
If the gop insists on wrecking the US economy it will lose 2014 and 2016 even worse than it lost 2012.
Majority leader Boner needs to get his cacus in line.