Many analysts had their eyes on China this week, trying to sort through the various economic data points to determine the outlook. Earlier this week the Chinese currency achieved an 18-year high relative to the US dollar, which would seem to indicate economic strength if the leadership were comfortable to allow it to appreciate strongly. However on Thursday the country reported a contracting trade surplus among the economic data released, which triggered selling in commodities on the assumption the Chinese economy may be slowing. Most people still agree the Chinese economy is in growth mode, but the question remains on how the country will be able to sustain the rapid growth curve of this century and still hold everything together. There is a wide variance of opinion on that issue.

The sell-first-ask-questions-later approach to uncertainty has been a driving factor in the overall weakness for commodity stocks during the last several weeks. It appears the lows of the move have been set, but it is likely that volatility will continue to be part of the story for the immediate future as investors react to each news item reported.

While these strong production numbers coming out of Mexico are impressive, it is even more important to note that none of these companies had any production at all just 10 years ago. The rapid growth they have accomplished to date, plus the bright future these companies are working towards, is a testament to the positive contribution that Canadian junior mining companies have made to the growing mining sector in Mexico. It has come as a direct consequence of the inflow of investment capital and the hard work of talented people to achieve this success. And that is bringing new prosperity to many people with high paying mining jobs that would not exist without this partnership of foreign mining interests in the country.

There are some who believe that Mexico may ultimately nationalize the mining sector or change its laws again to restrict foreign ownership of mines, as had occurred in the past. However it is far more likely that the ongoing success story for mineral exploration and mine development through the participation of foreign mining companies will demonstrate how much more productive the current policy is that allows for full foreign ownership. The mining sector accounts for a significant percentage of the domestic economy in Mexico and the political leadership is well aware of this fact....

On the exploration front, Kootenay Gold announced yet another positive batch of drill core assays from its Promontorio Deposit in Sonora, Mexico. The assays reported included one interval of 47 meters with a silver equivalent grade of 214 grams per ton silver. This comes from a newly discovered zone of the deposit, extending the lateral limits of the mineralisation by a further 700 meters. Promontorio is advancing to become one of the more attractive undeveloped deposits in the country, and Kootenay is in the midst of an aggressive drill program to continue exploration and also to complete infill drilling to upgrade the existing resource of the project....

Michael Kachanovsky