Category — Mining
After last year’s strikes in South Africa, platinum has been very much out of the news in 2013.
Yet global demand has hit record levels in the face of dwindling supply. The price now sits below its cost of production, which points to further supply shortages. And funding for exploration has all but dried up.
The case for platinum looks compelling.
So is it time to buy?
Just over three million ounces of that is needed by the car industry for catalytic converters. Another 2.75 million is used in jewellery (the Chinese can’t get enough of it, apparently).
About 1.8 million ounces comes from use in other industries. And another 765,000 from investment – particularly the new South African platinum ETF.
In fact, demand has been steadily growing since 2009. Yet the platinum price has been steadily falling since mid-2011, when it flirted briefly with the $2,000 mark.
Platinum’s all-time high came in 2008 at around $2,300. It’s $1,385 today. Its high for this year was $1,740 an ounce, in February. Its low: $1,300 in July. [Read more →]
December 13, 2013 Comments Off
It’s a bad time for the resources industry.
Everyone says. So it must be true.
But what if it isn’t true?
We’re glad you asked. Everywhere you look, folks are writing off the resource sector and Australian resource stocks.
But what if, rather than being the death of Australian resource stocks, this was actually the time to invest?
The latest news from mining giant Rio Tinto [ASX: RIO] may suggest things aren’t so bad after all…
Yesterday Rio Tinto announced:
‘Rio Tinto has set out its breakthrough plan to optimise the growth of its world-class iron ore business in Western Australia. Mine production capacity will rapidly increase towards 360 million tonnes a year (Mt/a) at a significantly lower capital cost per tonne than originally planned.‘
It’s hard to pick any holes in that news.
That’s a big increase in production. Rio forecasts to export just 265 million tonnes this year. So that’s a one-third increase.
If the increased production came without the margin improvement we would have wondered if Rio was just trying to dump iron ore on the market before a potential fall in iron ore prices.
But right now that doesn’t seem to be the case. In fact, the iron ore price has been surprisingly strong in recent months. [Read more →]
December 3, 2013 Comments Off
The last time you bought a car, did you suddenly notice other cars of the same type on the road?
We did. We noticed it last year when we upgraded our car.
Suddenly, there were Porsche’s everywhere. Only kidding. We upgraded to a Subaru Forester. But it was the same effect. We now see Forester’s everywhere.
And since we launched a technology investment advisory service six months ago, we now look at the whole market in a completely different way…
We no longer see companies as mining companies, healthcare companies or car companies.
Instead, we see them as different parts of one big technology industry.
Take cars. Mercedes-Benz has just released its new S-Class model. It’s just a car right? Albeit a super-luxury car. Well, it’s more than that. It’s actually one big piece of technology.
And like any other piece of technology, the pace of innovation doesn’t hang around for anyone. It’s unstoppable. As the Age reported on the Aussie S-Class launch:
‘Mercedes-Benz admits the rapid pace of technological advances has meant it can no longer afford to hold them [innovations] back for each generation of S-Class, which, due to its relatively low volumes and high development costs, generally only comes around each decade.‘
You know the story. Mercedes-Benz used to launch new tech in its luxury brands. This tech would then trickle down to the lower end models. Not anymore. Technology moves too fast for that. [Read more →]
December 2, 2013 Comments Off
Here’s a headline that should send shivers down the collective spine of the Aussie resources industry:
‘Goldman Sees at Least 15% Losses for Gold, Iron Ore‘
So says Bloomberg, reporting on the Goldman Sachs commodity outlook for 2014. It takes a brave investor to bet against Goldman Sachs.
For resource companies, a bearish commodities report from Goldman Sachs is like bumping into the Grim Reaper in a dark alley.
So, what does this mean for commodities and commodity stocks next year? It may surprise. It means one word: opportunity. But it won’t be for everyone…
There’s an old saying that investors shouldn’t bet against central banks because they can last longer in the market than you.
Those investors who tried to short sell the market over the past few years have learned that lesson to their cost. Just when it seemed as though the market was about to collapse, the central bank cavalry came to the rescue.
We expect that to continue for a long time to come as they try to manipulate stock prices gradually higher.
So if you shouldn’t bet against central banks, the same goes for betting against Goldman Sachs. In short, if you think you’ve got a lot of money to bet on the market, just know that Goldman Sachs has way more…way more.
The trick is not to bet against them but rather to anticipate their next move. [Read more →]
November 25, 2013 Comments Off
For all the talk in the mainstream you’d think the Australian resource sector was dead.
It’s a mighty struggle for any resource firm to raise capital.
And to look at the performance of Australian resource stocks, well, it’s hard to find any sector that investors hate more.
We won’t say investors are giving their shares away, but on some days, it sure as heck seems like it.
And yet despite the negativity, resources are still by far Australia’s biggest export. So what gives?
You can see the breakdown of Aussie exports for yourself in this chart:
November 21, 2013 Comments Off
Natural resource veteran Rick Rule was in town last week and declared 800 of Australia’s mining companies mostly garbage.
That’s a pretty big call, but probably right.
We trust his judgement. If you’re unfamiliar with his name, Rick Rule has been investing in natural resources for over forty years.
He spoke for free to a select group of Port Phillip Publishing subscribers. Suffice to say, he’s seen the same cycles play out over and over again.
But don’t be misled by our opening comment. He sees plenty of opportunity in Australian resource stocks. Some of the news this week would suggest he’s right. He doesn’t appear to be alone, either…
That’s bucking a global trend of declining foreign investment, according to a new OECD report. From all accounts, this is mostly resource related in the case of Australia. [Read more →]
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