What are your thoughts on mining stocks?

purch

Or would I be better off looking for articles in the financial press?

Yes.

There is quite a lot of coverage of Miners in the Financial Press, as much due to their over influence on the FTSE 100 as their individual merits.

Xstrata as a company are always highly leveraged, which always makes them riskier than some others. They are also the company that appears to be upgraded to buy, or downgraded to sell the most often. However IMO they are the most likely to quadruple in price if/when the next upmove in Miners occurs.

cloud_dog

Wobbly, as others have said miners are VERY volatile far more so than what you might consider normal volatility (if there is such a thing).

But, for the record I'm a big fan of PM miners and especially minor miners (juniors). Having said that, I would still steer clear of purely exploration companies, those that would need significant capital to start producing; credit is not easy anywhere atm.

I am loathed to suggest / offer any pointers to mining companies (although if you trawl through the UK Stockmarket 2009 and beyond thread I've rpobably listed my holdings.

If you are interested in making an investment and diversifying then funds (ETFs / UTs / OIECs) would be the place to go. A useful fund to consider, although not much history yet is Junior Mining Trust. The OH SIPP holds some as well as my DD CTF.

I believe there as a local (UK avaialble) ETF which tracks junior PM miners.

On a slightly different note, I'm not sure now is the time to be taking a position (just yet).

Wobblydeb

cloud_dog wrote: »

Wobbly, as others have said miners are VERY volatile far more so than what you might consider normal volatility (if there is such a thing).

But, for the record I'm a big fan of PM miners and especially minor miners (juniors). Having said that, I would still steer clear of purely exploration companies, those that would need significant capital to start producing; credit is not easy anywhere atm.

I am loathed to suggest / offer any pointers to mining companies (although if you trawl through the UK Stockmarket 2009 and beyond thread I've rpobably listed my holdings.

If you are interested in making an investment and diversifying then funds (ETFs / UTs / OIECs) would be the place to go. A useful fund to consider, although not much history yet is Junior Mining Trust. The OH SIPP holds some as well as my DD CTF.

I believe there as a local (UK avaialble) ETF which tracks junior PM miners.

On a slightly different note, I'm not sure now is the time to be taking a position (just yet).

Thanks cloud-dog, I will mosey on over to the mega-thread. I've probably read the appropriate bits before, but not been watching out for comments on miners specifically...

I am watching the markets with interest at the moment. I've currently got about 25% in cash, and I'm not sure the recent bear run is completely out of steam yet....

cloud_dog

Wobblydeb wrote: »

and I'm not sure the recent bear run is completely out of steam yet....

I'm not sure if the summer mele' / something bigger ,is only beginning.

Lets assume you had trawled the 2009 thread you might find comments on CEY, POG, FRES, HOC, YAU; I am also monitoring CGH, MML, MARL, NYO.

purch

especially minor miners

That made me giggle

sabretoothtigger

Wobblydeb wrote: »

Is big beautiful, or is there something to be said for one of the tiddlers? (although I've got to stick to full FTSE listing, not AIM, to meet the ISA rules).

If your just starting out big is best for sure and right now everyone is gloomy so this is good timing I would say.


Just owning the ftse means you own miners, if that sounds too simple then its not.
simple is best because things get complicated very quickly no matter what you do

Just the plain old FTSE 100 index recently gained the entry of a couple new commodity companies African Barrick Gold and essar energy (India)

Neither of them operate in the uk and really qualify as quite exotic for a normal investor I think.
Its not needed to buy tiny miners to be taking a risk, people dont realise the ftse is a high risk index pretty much


Those two arent the exception, I'd say the majority of momentum in the index is relying on higher risk commodity and foreign earnings.
BP isnt named british anymore for good reason, we dont have alot of oil left here and so its all about world wide growth, risks and global demand not the uk so much at all

I would still steer clear of purely exploration companies

That is a good tip. If you ignore the ftse and play smaller companies then cashflow is far more relevant though its true for any company.
The smaller companies can go under even when they have (potential) oil or a good mine just because it costs more then they can raise immediately.
If they wont lend to Spanish government, a tiny company is really going to struggle sometimes. A company with a small existing business in order to cover costs on exploration is a good tip to follow.

If the company struggles for money it may keep issuing shares continually (GKP seems to have some issues on this even though I thought they had some existing business ) or end up in the hands of debt holders



If you learn the factors on the bigger stocks it will help on the smaller ones. BP is raising funds right now with asset sales, in some ways they are lucky because cash buyers are not always there - the banks had this issue
Generally some ongoing business prospects combined with exploration will decrease the odds of being wiped out by funding factors which unless or even if you are an accountant is hard to estimate.

You end up gambling much more easily with smaller companies and the big index is volatile enough to see gains quite often

JamesU

purch wrote: »

Highly volatile sector. Of the FTSE 100 miners Xstrata probably has the most upside potential, but would be the riskiest play currently due to the nature of their business model. BHP Billiton probably is the least risky bet.

Comparison of BRWM fund and XSPR etf in chart above shows good correlation. And at least at first glance on charts, yes XTA more volatile (see second chart below also). And comparing four miners from FTSE 100, BLT seems least volatile:




But ideally it would be useful to have a better framework for making informed decisions once fundamentals screened. Suppose easiest starting point is a benchmark fund, etf and representative mining shares as above. But after this:

(i) what index is the best to use as benchmark against the funds, etf and a typical share? Useful as a barometer of upside and downside potential.

(ii) probably need a more objective measure of the volatility of the four miners. Maybe compare data on beta values and/or standard deviation? But what values to use, relative to what index, and where to find this info? Useful for choice e.g less volatile/less risk/less upside vs more volatile/more risk/more upside.

(iii) same framework can then be developed further for comparision and anaysis of e.g "minor miners" etc using the index and method of volatility chosen?

Anybody any thoughts on the questions above?

JamesU

amictus

I'm continuing discussion from another thread as I think it is better located here...

https://forums.moneysavingexpert.com/discussion/comment/47490205#Comment_47490205

I really like the look of BRWM and think I would probably choose this if I were to invest in just mining. However, I am interested in getting exposure to commodities in general. Initially, I was looking at BLT and XSPR, but am now leaning towards CYN. As it is an IT, it seems relatively stable in a pretty volatile sector. Also, it has a high proportion of assets in precious metals (gold, silver, uranium etc.), oil & gas and palm oil, which I hope will provide good opportunity for growth. However, it has only a low proportion of assets invested in basic metals mining, which, I think, makes it more-or-less an inverse of the commodities market weighting. To balance this I'm thinking of splitting my "commodities investment" with either BRWM or XSPR, or a specific mining equity. Any thoughts on this strategy? Am I complicating things unnecessarily?

At the moment, I'm looking at FXPO as my metal miner of choice. It just got a pretty favourable review from Questor...

http://www.telegraph.co.uk/finance/markets/questor/8811805/Questor-share-tip-Ferrexpo-bid-talk-highlights-its-low-cost-attraction.html

I think I'd have to keep close watch on this one if I do decide to go for it.

I had looked into VED but was a bit concerned that it (and other copper-heavy miners) might be affected by the decreasing copper price. Does this sound reasonable or am I being too simplistic?


One last thing... I was hoping to make my purchases next week, but, given the recent volatility, I'm pretty sure that I'll time it completely wrong. Any advice?


Thanks!

BLB53

If you only hold one miner for now it has to be BLT for both long term growth and dividend.

lvader

BLT (BHP) looks very overpriced compared to Rio Tinto, at least in PE terms anyway.