Here's Don Coxe's weekly webcast to institutional investors. Very worth listening to. I recommend all metals investors invest the time to listen to it.:
events.startcast.com
Coxe says there are 3 major movements in this metals bull market, and we're nearing the end of the first one. The second one will be a slowdown, where he expects the prices of commodities to correct after the initial big runup. The third one will be a dramatic move that lasts at least 5-7 years.
Coxe says buy companies (base metal stocks, gold mining stocks, oil sand stocks) with reserves in polically safe areas. He said majors don't want to invest 10 years to develop a mine in a politically unsafe area and then risk nationalism like in Bolivia. They'd rather buy up reserves by buying companies with reserves in safe areas.
Coxe says the pullback in the second movement would probably not be very long, as this "largo movement" tends to be short. He said the next 12 months would "great fun" but a very different game, and would provide the "last great opportunity" for the next 5-7 years. The next economic cycle after that will be a giant.
While expecting a correction in base metal prices, he was very bullish on the base metal stocks, saying don't sell them, but rather hedge by shorting futures on the underlying metals, as that's where the froth has been. He says the "sustaining force through any slowdown is mining companies will be eager in any pullback to buy their own stock or other mining stocks or both, and people will be surprised by their outperformance on the downside." He said don't reduce exposure to the group, but as he's been saying consistently for 4 years, particularly buy "reserves in the ground in politically secure areas of the world." He said mining companies are so cheap compared to others. Resource stocks haven't moved up like their underlying commodities.
I left this call being very comfortable with my holdings, dominated by undervalued base metal and mining stocks with valuable resources in politically safe areas. Coxe said for long-term investors, don't worry about the "phase 2" slower movement coming up. If anything, the only thing I might do to protect against any short-term "slower movement" is try to see if I can short some commodity futures to hedge. |
