Time to buy into commodities?

B_Blank

Have mining shares dropped enough to be a good purchase again yet? Have the markets overreacted to the bad figures recently (which could be due to the earthquake in japan)?

Should I plunge into risky assets now? Or wait till the ftse100 is 5400-5500 and the s and p is under 1250?

I think at 5400 for the ftse and 1250 for the s and p I am going to buy a broad range of shares weighted towards large caps and mining stocks that have been struggling recently.

Or do you think we are heading for the s and p being sub 1000 again within a few years?

gadgetmind

Hang on a minute while I go and fetch my crystal ball. :-)

mr_fishbulb

I think over the next year is probably a good time to drip feed into commodities companies (not the actual commodities themselves). Drip feeding will average out the price you get it for.

Also you can't take the performance for the FTSE 100 to be a representation of every share in it. The index could be down because all sectors excluding mining fell when mining actually went up - would that still be a good time to buy?

Are you looking to buy shares directly in these companies, or look for some sort of natural resources fund?

B_Blank

mr_fishbulb wrote: »

I think over the next year is probably a good time to drip feed into commodities companies (not the actual commodities themselves). Drip feeding will average out the price you get it for.

Also you can't take the performance for the FTSE 100 to be a representation of every share in it. The index could be down because all sectors excluding mining fell when mining actually went up - would that still be a good time to buy?

Are you looking to buy shares directly in these companies, or look for some sort of natural resources fund?

Be pretty hard for mining to not follow the general market. Seen as mining is basically based entirely on the global economy.

Reaper

I'm not so sure mining is a good idea. China is one of the key players whose demand for commodities has driven prices up, but with signs of that demand weakening and many western countries facing the possibity of a downturn they don't strike me as apealing.

For me the only exception is gold miners. It puzzles me why gold mining companies, particularly the smaller ones, have such low valuations when the gold price is high and holding up. So my only mining share is a gold miner call Cluff Gold, though note it is a particularly risky call as one of their mines is in the Ivory Coast and currently closed due to the instablity there.

B_Blank

Reaper wrote: »

I'm not so sure mining is a good idea. China is one of the key players whose demand for commodities has driven prices up, but with signs of that demand weakening and many western countries facing the possibity of a downturn they don't strike me as apealing.

For me the only exception is gold miners. It puzzles me why gold mining companies, particularly the smaller ones, have such low valuations when the gold price is high and holding up. So my only mining share is a gold miner call Cluff Gold, though note it is a particularly risky call as one of their mines is in the Ivory Coast and currently closed due to the instablity there.

Surely gold is going to lose its appeal with the end of QE2 and not QE3 on the horizon?

Kohoutek

If you think the Chinese economy will slow down or go into recession, don't buy commodities!

Reaper

B_Blank wrote: »

Surely gold is going to lose its appeal with the end of QE2 and not QE3 on the horizon?

I don't honestly know, but with the UK, USA and Eurozone economies all looking pretty ropey, and emerging emerging markets throttling back their economies fearing inflation and overheating it is getting harder to see where best for investors to target. In times of uncertainty investors often like to sit it out in gold. I'm not holding gold directly as I can't see any pressing reason for much growth (unless another shock comes along, which might happen in Europe) but I also see no reason for it to fall either.

That's why I have not invested in gold directly and my only small investment is a gold miner I felt might be undervalued.