Facebook or the Big Miners?

The market capitalisation of the six biggest gold miners combined is US$32 billion or the same as LinkedIn. The market capitalisations of BHP, Rio Tinto, Anglo American, Glencore and Vale combined is now only US$211 billion. The market capitalisation of Facebook is a cool US$308 billion.  Commodities have a finite supply which should support price. But it seems the demand for free communication through the Ethernet in this lonely world is virtually unlimited. Surely there is something strange here. How do you monetise free communication at such lofty valuations? I am told that it is a secret.  Is the emperor wearing any clothes?

This week my home city of Dublin hosted an annual Web summit. Some 43,000 delegates attended the event from 134 countries. With that many souls it is even bigger than the annual miners and prospectors convention (PDAC) in Toronto. The Web summit will go to Portugal for the next three years because of a silly row between the organisers and our government.

There was a time when we lived in the physical world. We made things and we farmed and we sold what we produced. The industrial revolution brought machines to do the grunt work. Mechanisation led to accelerated productivity and a concentration of wealth. Growth led to huge demand for commodities.

Entrepreneurial industrialists became ruthless through greed and later assuaged their gilt through philanthropy. In the developed world we need to spend less and less of our income on sustaining ourselves. Consequently we have more money and time to think and chat and surf the world-wide-web. Now we are in the knowledge age. Our disconnection as humans shows in the popularity of social media sites like Facebook. We have become distracted and less inclined to focus. The average smart phone user picks up their device more than 1,500 times per week. How will this new experiment at the interface between human and technology affect our children?

Is the big idea the imperative to ensure the final ascent of the struggling masses. If the developed world does not realise the ascent of the undeveloped world and unlock its promise then it looks like it will be over run sooner rather than later.  On a more banal note this ascent will need infrastructure which will consume metals. Without equality Facebook will be just a way for the masses to share their misery.

2 thoughts on “Facebook or the Big Miners?”

  1. Thanks John amazing stat on market caps. China’s first sub 7% growth year last year with 6% and the market panics. Growing an absolute number of trillions by more than 7% gets harder and harder every year. Growth “slowing” still means growth and more demand and an absolute bigger commodity volume needed to satisfy it. World populations projected to keep growing to 2050. Commodity requirments compounded by the growth in living standards. GSK CEO Andrew Witty said 300 million new people around the world in the next 5 years will access healthcare for the first time, the north American market , in size every 5 years more multiples to come. Metals indices now at a new post 2008 low. Could go lower? “the trend is your friend ” or “whilst there’s blood on the streets”?


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