PM mining shares

[garthy]

Minors forecast on the future price and cost of gold and silver.

 

 

[HawkHybrid]

aureus mining ticker lse:aue might be worth some

research time.

 

risks include ebola, debt and the price of gold.

 

good points include having first gold pour on a potentially

functioning mine. recent claims of $800-$850/oz all in

costs on grades of 3-4g/ton, 120k oz per year.

 

~80% owned by institutions.

 

HH

[KDave]

I have taken a small position on a few of the FTSE 100 miners recently (RIO, ANTO, GLEN, BHP). The dividend return on some of the companies are now fairly decent due to the recent falls. The question now is, with commodities prices still falling, can the companies I have invested in maintain their dividend going forward? I have already lost a few percent of capital on paper and expect further losses for some time (Just like I have on my gold holdings, and expect those losses to increase short term). The dividend returns swung my decision to invest in these stocks as opposed to keeping the money in the bank or putting it into gold. It is also an attempt to diversify my stock holdings as until now I have held no mining stocks. 

 

I am not advising anyone else to do this. Who knows how low the commodities will go and how many companies will go bankrupt as global supply/demand of said commodities is rebalanced? Its a risky move but one I hope will pay off in the long term.

[motorbikez]

Most miners will cut or cancel dividends completely if the downward cycle continues, sometimes after having done that they may announce a special dividend if things are not as bad as they first envisage. Also fund managers who have reasonable holdings can influence slightly the amount of any potential dividend cut.

[HawkHybrid]

if you believe that gold/silver is going to bottom soon

then gold/silver only miners should be worth some

further research.

 

dividends is dependent on profits and mostly future

profits. if a stock market crash occurs, the companies

that you have highlighted would likely go down with it

(similar to what they did last time) just my opinion but

there may be better buying opportunities for companies

that deal a lot in base metals.

 

HH

[KDave]

if you believe that gold/silver is going to bottom soon

then gold/silver only miners should be worth some

further research.

 

dividends is dependent on profits and mostly future

profits. if a stock market crash occurs, the companies

that you have highlighted would likely go down with it

(similar to what they did last time) just my opinion but

there may be better buying opportunities for companies

that deal a lot in base metals.

 

HH

Agreed that there is more downside than up with the stock market in general. We are due a recession as well   

 

These mining shares are already nearing the last stock market crash price levels now so a stock market crash would indeed result in an incredible buying opportunity. The companies I picked are mainly base metal miners with some exposure to PM's and to a lesser extent oil. I am not trying to time the bottom here though, I don't believe I have the luck to do that. Knowing my luck copper will fall further from its 6 year lows, iron will fall further from its 9 year lows and gold and silver will keep falling as well. 

 

The Commodity metals price index is approaching 2005 levels so still has a fair way to fall before it returns to historical averages which does not bode well for my investment;

 

http://www.indexmundi.com/commodities/?commodity=metals-price-index&months=360 

 

The index averages Copper, Aluminium, Iron Ore, Tin, Nickel, Zinc, Lead, and Uranium Price Indices and does not include PM's. I was surprised to see that the last gold/silver spike (1988) was accompanied by a base metals price spike too. I have not seen that before. 

[Pipers]

You need to read the capex on all miners deep down in the figures!

I myself give miners a miss but if commodities fall to 50% then I may look again and ride the bull.

[motorbikez]

@Pipers probably a wise move pipers I would not personally buy miners in a downtrend for dividends regardless if they are showing big yields.From past experience I know miners are ruthless with dividend cuts & should only make up a small part of your portfolio.

 

Anyone interested in a punt on miners can buy into the investment trust shown below.I'm not recommending it in fact I'd say do not put a lump sum into that IT at all, pay £100 or so a month & sleep easy by £ cost averaging, things will turn around sometime they always do, so buying monthly takes the timing and big risk out of the equation.

 

http://citywire.co.uk/money/blackrock-world-mining-plans-to-raid-reserves-for-divi/a832826?re=35560&ea=308086&utm_source=BulkEmail_Money_Daily_Summary&utm_medium=BulkEmail_Money_Daily_Summary&utm_campaign=BulkEmail_Money_Daily_Summary

 

As per usual DYOR there are many Investment trust companies out there study them carefully & before committing any lump sums check the directors holdings etc.

[KDave]

Yes I am thinking my small move into base metal miners was a mistake. The price charts of commodities paint an interesting picture though. Iron Ore is approaching 2007 prices so either the world demand for Iron ore is down or supply is up. Perhaps a combination of the two? Same story with copper hitting 6 years lows last week. Either way its not looking good for miners! 

 

I notice before the biggest credit expansion in history, commodity prices were relatively stable for years. Perhaps we are returning to normality and the last 10 years were just a blip caused by debt fuelled growth? I would be interested in anyone's theories of why the prices of the base metals grew so much and what people expect going forward from here.

[motorbikez]

 I would be interested in anyone's theories of why the prices of the base metals grew so much and what people expect going forward from here.

 

China had been expanding at a tremendous rate & was consuming all commodities voraciously, but no more, China is slowing down markedly so when the biggest consumer of commodities puts the brakes on sharply,.base commodities can only go one way because there is no one else of any consequence to take up the slack.

[motorbikez]

This is an interesting chart & I like this kind of thing because no government in the world can manipulate this & pretend all is well,you can see the massive drop off in shipping when the financial crisis hit in 2008 by the end of 2008 shipping of goods around the world had collapsed & is only now turning around minutely so.

 

 

 

For anyone who doesn't know what the Baltic Dry index is & is interested to find out here is a link to wikipedia which gives a good explanation & some useful links.

 

 

 

https://en.wikipedia.org/wiki/Baltic_Dry_Index



 

[KDave]

I have posted theories regarding the recent up tick in the Baltic Dry index on another thread on here with links to articles but cant find the thread.

 

When I went looking all over for information I found that recently there is not that much interest in the media on Baltic Dry. I can only presume that is because it does not fit the story of the economic recovery and so is ignored by most journalists who cant make heads nor tails of it. 

 

To summarise - This years recent movement from its 25 year low can in part be attributed to China's massive import of grains to feed its population. In June the import of corn is up 30 times what it was last year. If the upwards movement in the index is largely based on the increase in Chinese food imports the rally is not sustainable.

 

For me the index is the additional piece of the puzzle regarding falling commodity prices -when the prices by themselves are falling it could be either over supply or falling demand. Combined with a falling global shipping index can only mean falling demand. This probably means we do have global economic contraction (Deflation), which is why growth is non existent outside of the QE boosted financial markets and manipulated GDP figures.   

 

Found the original article - link to source;

 

http://www.forbes.com/sites/michaellingenheld/2015/07/23/the-baltic-dry-enigma/

[DRooster]

China had been expanding at a tremendous rate & was consuming all commodities voraciously, but no more, ...

because plenty of that commidites buying was based on totally fictional consumption forecasts by "imagined" industry which when "found out" has caused the Chinese stock collapse.

I want to know where all the piles or iron ore (etc) are lying around.

I guess we found out where all the cyanide was hiding

[HawkHybrid]

China had been expanding at a tremendous rate & was consuming all commodities voraciously, but no more, China is slowing down markedly so when the biggest consumer of commodities puts the brakes on sharply,.base commodities can only go one way because there is no one else of any consequence to take up the slack.

 

I would also add stockpiling. if china has multi decade

investment plans then multi year stockpiles are not too

farfetched. in terms of turnaround time think of major

items that use base metal eg cars, fridges etc and

think how many years they operate for until they are

replaced. the massive first time buy spike demand from

these items are going to be followed by lengthy multi

year muted demand as people get their moneys worth

from their appliances.

 

when stockpiling pm's, too much is never enough 

 

HH

[KDave]

Well that didn't take long! Looks like that shipping rally was short lived after all. Perhaps I should sell those miners now and buy back in later 

 

http://www.telegraph.co.uk/finance/economics/11808488/World-shipping-slump-deepens-as-China-retreats.html

[HighlandTiger]

China (most populated country) with 18.44% of the worlds population, is in a bit of a recession. 

Russia (ninth most populated country) with 1.97% of the worlds population is being hit by financial sanctions.

 

So two massive countries, which have one fifth of the worlds population between them, are suffering downturns in their economy.

 

Is it surprising then that sea freight traffic to these regions is down.

 

And yet, freight traffic is up in many places, hence the reason places like Montreal are building new container terminals to cope with the increased traffic, up about 4% year on year.

 

In India, (16.66% of worlds population), their ports have increased sea container traffic by 5% year on year.

 

In the USA, (4.41% of worlds population) many ports all around its coast are showing increased traffic 

 

 

Just because China has a cold, it shouldn't mean we should all be rushing out for the lemsip

[Cointreau]

China (most populated country) with 18.44% of the worlds population, is in a bit of a recession. 

Russia (ninth most populated country) with 1.97% of the worlds population is being hit by financial sanctions.

 

So two massive countries, which have one fifth of the worlds population between them, are suffering downturns in their economy.

 

Is it surprising then that sea freight traffic to these regions is down.

 

And yet, freight traffic is up in many places, hence the reason places like Montreal are building new container terminals to cope with the increased traffic, up about 4% year on year.

 

In India, (16.66% of worlds population), their ports have increased sea container traffic by 5% year on year.

 

In the USA, (4.41% of worlds population) many ports all around its coast are showing increased traffic 

 

 

Just because China has a cold, it shouldn't mean we should all be rushing out for the lemsip

I shall do a fact check on this. Mark my words.

[HighlandTiger]

I shall do a fact check on this. Mark my words.

LOL

 

It took me 30 mins to write that post. Most of it on google time

[Pipers]

Since you guys are talking charts, and shipping ones at that.  I always use the BDI and the Harpex ( container) shipping charts if that helps.  It does not make good reading and is a good indicator of demand for goods.  Obviously its post event.

 

http://www.harperpetersen.com/harpex/harpexVP.do

[Pipers]

HT, before I invest I check it out if possible, it is easy with UK retail just look around the shops look which ones have a buzz about them, foot flow, busy.  Its not as easy with big energy or mining companies (not that I have ever invested in a miner yet).

 

Oh by the way in the past those ships to the US would have cargo in and out of port now thats not the case so trade is down, The USA has become like the UK it exports less and less every year the Harpex does not lie.    

[motorbikez]

China (most populated country) with 18.44% of the worlds population, is in a bit of a recession. 

Russia (ninth most populated country) with 1.97% of the worlds population is being hit by financial sanctions.

 

So two massive countries, which have one fifth of the worlds population between them, are suffering downturns in their economy.

 

Is it surprising then that sea freight traffic to these regions is down.

 

And yet, freight traffic is up in many places, hence the reason places like Montreal are building new container terminals to cope with the increased traffic, up about 4% year on year.

 

In India, (16.66% of worlds population), their ports have increased sea container traffic by 5% year on year.

 

In the USA, (4.41% of worlds population) many ports all around its coast are showing increased traffic 

 

 

Just because China has a cold, it shouldn't mean we should all be rushing out for the lemsip

 

If you look at the prices of all of the large commodity miners shares worldwide they are at or near 5 year lows,that tells you something & something not good despite the money that has been pumped into stock markets the world over.

Re Montreal, Canada is commodity giant and like anywhere planning takes time any new terminals could have been in the planning stage for 10 years or more & regardless whether the country is in trouble or not,major infrastructure projects continue as like anything the good times cycles come & go.

[motorbikez]

Here is a punt for anyone interested in Commodity shares either PMs  or base metals (I'd err towards PM's personally ),buy either Canadian or Australian based miners if your risk threshold is high & If you believe things will turn around in the next year or so,my reasoning is the £ has strengthened massively over the last 2 years against the CAD & AUD so you can buy bombed out Australian & Canadian miners very cheaply your £ goes more than 30% further than 2 years ago & share prices are at or near rock bottom.

 

When commodities turn around both Australian & Canadian currencies will turn around & get a lot stronger against the £  so you get double bang for your investment/punt when you sell & convert back to pounds.

 

As per usual  DYOR & this is not for the feint hearted. The key point here is if you believe commodities are going to turn around over the next year or so personally I don't see it.Pm's maybe, base metals I doubt it.

[KDave]

HT your alternative research and viewpoint is much appreciated as it gives me a faint glimmer of hope for mining shares lol. There is too much information to measure to make a perfect judgement so I will test my luck and see if the dividends are paid out. Any paper capital losses in the mean time are irrelevant unless I bottle it and sell out before my intended timeline. 

 

I am also looking for ways to invest in the companies that contribute to the Baltic Dry index as a long term punt if anyone has any suggestions for me to research? Perhaps this is totally irrational and crazy given our recent discussion but unless we invent another way to transport goods from one country to another these companies should always have some demand. Given a long enough time frame they should theoretically recover nicely. Timing the market is impossible so why not start when the news is at its worst? 

[sovereignsteve]

Here is a punt for anyone interested in Commodity shares either PMs  or base metals (I'd err towards PM's personally ),buy either Canadian or Australian based miners if your risk threshold is high & If you believe things will turn around in the next year or so,my reasoning is the £ has strengthened massively over the last 2 years against the CAD & AUD so you can buy bombed out Australian & Canadian miners very cheaply your £ goes more than 30% further than 2 years ago & share prices are at or near rock bottom.

 

When commodities turn around both Australian & Canadian currencies will turn around & get a lot stronger against the £  so you get double bang for your investment/punt when you sell & convert back to pounds.

 

As per usual  DYOR & this is not for the feint hearted. The key point here is if you believe commodities are going to turn around over the next year or so personally I don't see it.Pm's maybe, base metals I doubt it.

Excellent reasoning, I have recently been thinking along these lines myself.

However, the problem is guessing when the bottom of the cycle is going to land. Many small miners may well go out of business before that happens so the problem is deciding where to put your money.

Also, make no mistake about it; it is extremely difficult for the retail investor to make money on commodities. The big traders who do this full time have access to a vast range of insider knowledge, experience etc. Commodities are deeply cyclical and volatile and open to all sorts of manipulation regarding supply, stockpiling, as well as the weather! and if all else fails the big players can always directly manipulate the prices to suit their own positions.

[HawkHybrid]

Here is a punt for anyone interested in Commodity shares either PMs  or base metals (I'd err towards PM's personally ),buy either Canadian or Australian based miners if your risk threshold is high & If you believe things will turn around in the next year or so,my reasoning is the £ has strengthened massively over the last 2 years against the CAD & AUD so you can buy bombed out Australian & Canadian miners very cheaply your £ goes more than 30% further than 2 years ago & share prices are at or near rock bottom.

 

When commodities turn around both Australian & Canadian currencies will turn around & get a lot stronger against the £  so you get double bang for your investment/punt when you sell & convert back to pounds.

 

As per usual  DYOR & this is not for the feint hearted. The key point here is if you believe commodities are going to turn around over the next year or so personally I don't see it.Pm's maybe, base metals I doubt it.

 

I think it's more important to concentrate on companies that

have a better chance of giving a good return. there are many

miners out there but how many of these miners actually have

a mine? ultimately until they actually create a working mine

that produces something that they can sell, they are just worth

disputed paper figures.

 

funding is the key to any miners success.

 

if a miner can create a working mine then they can unlock

at least part of the value of the asset that they own. not

yet producing miners are worth only a fraction of what they

would be worth if they were producing. having sufficient

money also means they are less likely to go bust if something

unexpected happens.

 

in a world where money makes money. funding won't guarantee

success but without it you're more likely than not to fail.

 

HH