My latest articles can guide Fools looking to enter commodities. It's not too late!!
Coal has come a long way, to be sure, but drama like this signals the coal train has legs... really... no... REALLY!!!!
This mining strike in Peru is shutting in production at some key mines and threatening to do the same at others. If you read all these articles, you'll see a clear pattern emerging: global supply of raw materials to feed the robust demand from emerging markets is being threatened by a slew of factors. The nationwide strike in Peru is example #1.
Example #2 of supply disruption: Mining equipment makers have more business than they can handle. Backlogs are enormous, and growing. 40 months to get a SAG mill delivered! Slower mine development = supply shortfall = higher prices.
Example #3: Aluminum production worldwide hampered by snowstorms in China, the earthquake soon after, thegas explosion in Western Australia, power shortages in South Africa and even Texas, etc. etc. As I state in the article, I consider ACH a buy buy buy!! These prices will not last long beyond their release of earnings. Alcoa started getting into attractive territory today, but I think it will get cheaper still... perhaps to $30 as all this supply disruption news comes out.
The effects of that gas fire in Australia will linger until at least August, and these are some huge mining operations affected.
Consolidation activity is picking up nicely in the industry, and I believe it will increase to an unprecedented pace. Meanwhile, mining costs are rising faster than prices, which in the long run is another early bullish indicator for prices.
Gold, which is not a commodity, but a currency, is surging yet again. Silver, which has properties of both an industrial commodity AND a currency, is primed to rise even faster. Gold will go much higher. The USD, unfortunately, will go much lower. It is NOT too late to get into gold and silver. I have pronounced this one my favorite a couple of times (AEM). Fool Contributor Toby Shute's favorite gold stock, Yamana, is second on my list, but not by much. And everyone who reads my stuff knows I love CEF as the best proxy for bullion available.
For silver, my number 1 is Silver Wheaton. Coeur d'Alene gets my vote for most undervalued. I own a couple dozen junior silver miners, with my absolute favorite being Great Panther (GPRLF) despite some horrible performance to date. As with most of the juniors, my pain is your gain. I got in too early, not recognizing that the whole group was being held down by illegal shorting activity. That shorting will cease when silver breaks back out, so today's levels for many, many juniors represent awesome deals.
For energy, natural gas is my present focus. I think oil will be very volatile, while natural gas will tend to spend some time catching up with less volatility, IMO. I own XTO energy, Chesapeake, etc. For oil, I'm loving the looks of CNOOC here (CEO).
For coal, I own Massey Energy, Peabody Energy, and a little of the KOL ETF for kicks. I missed out on the rest of the coal miners because I was writing about them (can't trade for a period before and after writing. That's a sacrifice I'm happy to make if I can help out some Fools.
Brazil's Vale is on sale in recent days, despite having been successful with some impressive price increases recently. Vale (RIO) is a buy IMHO. A fascinating combined coal / iron ore play is Cleveland Cliffs (CLF). Again, the stock has doubled recently, but with good reason.
For copper, I like Souther Copper, but I wouldn't be buying it right now unless the strike ends very quickly. Meanwhile, CAPS favorite Taseko Mines is looking sweet!
There is so much more to discuss, but this brief post has taken more time that one might guess. I hope it's a helpful resource for some fools who may have waited a bit too long to enter the commodities space. I'm here to suggest that it's not too late... that there are years left in this bull market for raw materials, energy, and metals. I firmly believe that a combination of the companies listed above woven into any portfolio (up to your own comfort level allocation wise) will go a long way towards shoring up one's finances from these woes that are plaguing the markets.
Good luck, Fools!