Uncertainty is Being Blamed for Predictable Outcomes

Metal prices are constantly referred to as being volatile . ‘Volatility’ is frequently used as a substitute for ‘uncomfortably low’ in market descriptions. Volatility should diminish through the trough of the cycle. Consistent with that expectation and contrary to common usage, metal price volatility is nearly as low as it has been at any time in the past 35 years. The words ‘uncertainty’ and ‘volatility’ are being applied almost instinctively, sometimes to save embarrassment or create an excuse, even where ‘highly likely’ and ‘predictable’ are more apt descriptions for financial and economic outcomes. There are two further examples of the misuse of the terms ‘uncertainty’ and ‘volatility’ in this week’s PortfolioDirect investment report. (VIEW LINK) This is more than nitpicking over semantics. Misuse of the language to describe business conditions shows a failure, or possible unwillingness, to understand the true predicament of the mining industry which puts it at risk of failing to respond most effectively to the prevailing conditions and being unable to take advantage of possible opportunities.