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XMFSinchiruna (26.55)

POSCO's Hiccup in the Global Growth Story



October 15, 2008 – Comments (3)

New evidence is starting to emerge that China is stalling for the near-term, but I see decoupling as ultimately inevitable, and continue to believe that China and other economies that were in a position of strength before the crisis unfolded will lead the way out of the crisis. When paper fails, hard assets are the place to be. I'm not saying steel and aluminum are necessarily the best places to be within the hard assets space, but as belwhethers they are crucial barometers of economic strength or weakness. I see near-term declines in prices for iron ore and coking coal when they are re-negotiated next year, and some continued weakness in copper prices, steel, and aluminum.... which is why I advocate a focus on precious metals for the time being. One can always shift pm gains back to base metals and related finished products once the China growth engine starts rumbling again.

3 Comments – Post Your Own

#1) On October 15, 2008 at 10:29 PM, XMFSinchiruna (26.55) wrote:

Let me clarify... while I think copper prices could weaken further from here in the near-term, I see incredible value in the mining shares... which have already fallen by 70% some of them. As with any equity group, further hedge fund liquidations could cause downward pressure despite that value, but I think long-term investors with cash on the sidelines could do worse than top start entry positions in copper miners here, with an eye towards dollar-cost averaging if they weaken further. Ultimately, copper will find its footing once more, but at this point it looks as though precious metals will lead the recovery for the commodities sector.

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#2) On October 16, 2008 at 12:05 AM, DemonDoug (31.18) wrote:

sinchi got any favorites?  Like barrick or yamana?

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#3) On October 16, 2008 at 12:15 AM, XMFSinchiruna (26.55) wrote:

Yamana is better than Barrick IMO.  :)

Kinross, IamGold, Gammon Gold are nice options as well.

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