Hi Grommit -
It looks like all commodities are selling off due to fears that China and other world economies are slowing down. I have a GTC order in for CLF at $38.50/share (a low ball offer). I am also trying to sell off (small sales) other resource positions I hold that still have gains. These have/are long term holds.
I think I can buy back many of the good resource companies at much lower prices in 6-18 months.
I am building my shopping list too. CLF, CUM.TO (CPPMF) below $3.00/share, AUNFF (below $0.80), RIC (below $5.00/share) and many others. I need to be careful that the cost of production is not higher than the eventual price of the commodity.
The Candian Oil Sands have the highest cost of production so SU and COSWF may seem cheap as Oil falls but really could get much cheaper when they have to shut down production to stop the large losses.
Therefore, SU is my favorite and if Oil falls to $40/barrel (perhaps worst case w/ maybe a 10% probability), I will double my position if I can get it below $20/share. Stock is selling now at $26.83/share with oil at $78.25/barrel. The longer oil remains low, their hedges run out. I believe their cost of production is around $65/barrel (vs XOM has some oil at a cost of $15/barrel). It's all about where their marginal cost is and how long the market price of oil stays low.
This is the same thinking for coal, iron ore, copper, silver and gold. You must watch the price of the commodity as I believe many of these prices have a lot more to fall. This is what I watch and track that help me decide where we are in the commodity cycle goo.gl ,
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I did buy some EXLpB and have an order in for Excel Trust, Inc. Common Stock (NYSE: EXL). I think it is a safe place to hide as their properties are located in SO. CA and have a reasonable debt profile. SO. CA is still growing and still spending money at the local malls.
goo.gl
EKS |
