consumer, already carrying a massive debt load,
will no longer buy those no longer cheap Chinese
goods. This will cause political instability in China. The boxers, round two        Currencies have to fall against something, and the
US dollar can’t fall against the RMB or the 40-odd
other currencies that are chained to it. Add to this the
historical fact that currencies fail about once every 35
years—  think Richard Nixon and the end of the gold
standard, or the 1944 Breton Woods Accord.        Since global currencies must go down against
something, they will have to fall against things that
have intrinsic value. In my mind, these things are
commodities like gold, copper and palladium. Today I want to talk copper, specifically Phelps Dodge (PD:NYSE).  As you can tell by the chart, Phelps has finally broken its downtrend. This
chart looks decidedly bullish over the past year.        As you would expect, money flow has climbed
from the negative into the 250 million dollar range.
This is because operating income went from a loss
of 10.2 million in Q2 2002 to a gain of 17.2 million in
Q2 2003.        The company continues in a lean and mean
phase of operation in which it is attempting to bring
production costs down below 60 cents a pound. This
has already helped save US$76 million in Q2 alone.        But the real story here is the other side. The New
York Commodity Exchange (COMEX) averaged 74.7
cents and 74.1 cents in Q2 of 2003 and 2002, respec-
tively—  and 75.4 cents and 73.2 cents in the respec-
tive first halves. Copper deficit More importantly, Phelps Dodge sees a global copper deficit in 2003 as the U.S. and European
economies grow. Chinese copper consumption alone has been growing at rates above 15% year-
on-year. This would indicate a copper price
between 75 and 78 cents a pound going
into the second half. Recently, COMEX saw
September copper futures at 81.50 cents a
pound.        Add to this the fact that Iraqis have
scavenged their telephone wires and sold
them for scrap.
They will have to be replaced.        Furthermore, the entire electric grid in
the U.S. will now have to be buttressed to
prevent further blackouts. All this takes
copper. PD is the one to sell it to them. Buy Phelps Dodge (PD:NYSE) under US$47 as a conservative contrarian play
on the global economic rebound.   n 9 www.taipanonline.com SEPTEMBER 2003        The Value Stock Screen has
been destroying the market.
This year in the pages of Taipan,
I’ve recommended KVH
Industries (KVHI:NASDAQ),
Orbital Sciences (ORB:NYSE), and DHB Industries (DHB:AMEX). All were selected
by the Value Stock Screen system, and all were indi-
rect plays on the surging defense budget. On August 18, I recommended selling KVH KVH Industries up 84%, Orbital Sciences
up 80%, and DHB Industries up 12%…  
all this year! Let’s make it 4 for 4: Buy this US$0.75 military
tech stock I think will be worth US$20 by 2008 next, please… Brian Hicks