Southern Copper Corp (USA) (PCU)

Metal mining industry. Sold short PCU on 11/13/09 in real life portfolio @34.48/share.

because currency is just paper.

copper! cu will double in 2010

value+growth

Copper demand will rise as the world's economy recovers. Buy on a dip and hold.

Copper is in a little bubble but PCU is in a bigger one.

Remember the last time commodity producers had PEs in the 50s? It wasn't that long ago, just summer 2008 when coal and fertilizer companies routinely sported nosebleed prices, then quickly crashed. Who could have seen that coming? (Raises hand.)

all mines are outside the USA and not subject to our labor laws, unions or the EPA

Exposure to Copper. Electronics aren't going away any time soon.

Because I sold my shares!

Not as appealing as FCX but almost as good. Near its 52 week high, so there is some risk of a short-term pull back. It will benefit from most of the factors that will support FCX, namely lower production costs and rising metal prices (partly due to devaluing currencies). One of my few buy and holds.

The world is pulling itself out of a large recession. Right now, people in the Us are paying down debt and saving more. In 6-9 months that will reverse. Pent-up demand for construction, repairs, and infrastructure will cause demand for copper to increase. Because of the savings and debt-payment, inflation is low. Once people start to spend, US inflation will increase (the government will ensure that). That, combined with increased demand will double the price of copper.

While PCU is just over 30 now (first day of fall, 2009), by this time next year it could hit 60. During that time, the S&P will probably only go up 30% or so (if that). This will score a lot of CAPS points (and an investment will score a lot of $$$).

Copper going up.

It's all about Power!

Too much too soon. This will pull back considerably before it goes higher in the long-term.

Given the massive government debt and trade imbalances the United States has, the Fed will be forced to print money to make up the difference. This will destroy the currency and drive up the price of commodities. Southern Copper is a good company that, being a producer of industrial metals, will do well, partly due to inflation in the U.S., as well as increased purchases by other countries seeking to grow their infrastructure on a weak dollar.

Chart looks toppy and overbought

commodities wont get any cheaper

Chinese economic growth = Increased copper prices.
Southern Copper has the second largest in ground reserves of any public traded copper company, 78 billion lbs vs 103 billion pounds at Freeport McMoran. But Southern Copper, unlike Freeport, has excellent profit margins, return on equity and assets and is not saddled with debt. Add the fact that PCU has excellent cash flow and has on average payed out about 50% of its earnings in a dividend and you will see that Southern Copper is the superior way to play copper.

Commodity / Copper Mining