2014 the year of the miner

[Fermion]

At least for those mining stocks that survive.

There are some really beaten down mining stocks. I think there are some that have been thrown out with the bathwater by mistake. Will need to do a bit more research but 2014 could be a profitable year for an investment.

 

[brewer12345]

Mining is a difficult business. Environmental regulations, union contracts, geological challenges, logistical issues, the roof falling in, you name it. All of this is in an environment of highly volatile commodity prices. Ugh. I have fooled with miners in the past and they are tough to make money on. If you want to make sure you are trafficking in a name you know will survive, pick the company that is the lowest on the cost curve. If you think you can call the upward turn in the price of the commodity being mined, buy the company that will just barely survive the downturn and which everyone is convinced will die (i.e. very cheap equity).

Much luck to you. I m just happy I never put my own money into miners.

 

[Rothman]

In report I heard on CNBC yesterday the price of gold has fallen below mining replacement costs, that means more companies will fail in short term. Until that report I was thinking maybe this was a sure bottom to buy into. Given company specific risk now I'd lean towards commodity index funds as a play on the global recovery.

 

[aja8888]

Since steel production is up, and so are some steel stocks, I would have a look at companies that mine and sell metallurgical coal. Also, if global demand for goods is up, and China growth is real and positive, copper may be a good place to invest. FCX (Freport) is a good candidate and they also have a recent oil & gas business, which may provide good cash flow.

Gold miners are not on my list of favorites as they are very speculative and gold may see a downtrend this year with a booming global economy.

 

[JacqJolie]

At least for those mining stocks that survive.

There are some really beaten down mining stocks. I think there are some that have been thrown out with the bathwater by mistake. Will need to do a bit more research but 2014 could be a profitable year for an investment.

Well, I was one of the people that put quite a bunch into GDXJ, Goldcorp, Yamana and a few others around Xmas / New Years for myself and my son. Am up about 15-20% depending on the co. - any thoughts on timing on the sale side in the sector? Things are moving a little faster than I expected them to, particularly today. I usually take about 25% off the table at a 25% gain, 50% at 50% gain and then sell the rest at 100% or hitting close to the 52W high (doesn't happen very often). But usually things don't move this quickly except for takeover situations. Most stocks I buy have a dividend, so I don't mind holding for the next cycle.

I've read that if they put the brakes on QE, gold will be adversely affected. Is this correct?

Sorry for the stupid questions, but I'm not very familiar with the mining industry and its cycles. Usually stick to mostly O&G since I work in the industry.

 

[Fermion]

I am up 60% so far in 2014 on my mining stock pick, Thompson Creek metals.

I think the call for 2014 being the year of the miner is paying off.

I sold 3/4 of the position so now I have $4000 profit plus zero cost basis in the remaining shares.

That is the way I roll.

 

[JacqJolie]

Thanks for the reply Fermion and congratulations on a nice gain!

I had some time to do some further reading yesterday (eg.):
Goldcorp, Yamana Gold Offer Less Risk, Barclays Says - Stocks To Watch - Barrons.com

I will be holding and possibly adding as well. I think I picked up some good companies (have owned most of them before) and just got lucky in the timing on the purchase price. Had a look at Thompson and can see why you would make the sell/hold decision you did. This isn't a very good article on Thompson but the comments are interesting:
Thompson Creek Metals Company Inc (USA) (TC): Thompson Creek Appears Destined To Fail - Seeking Alpha

 

[Fermion]

Thanks for the reply Fermion and congratulations on a nice gain!

I had some time to do some further reading yesterday (eg.):
Goldcorp, Yamana Gold Offer Less Risk, Barclays Says - Stocks To Watch - Barrons.com

I will be holding and possibly adding as well. I think I picked up some good companies (have owned most of them before) and just got lucky in the timing on the purchase price. Had a look at Thompson and can see why you would make the sell/hold decision you did. This isn't a very good article on Thompson but the comments are interesting:
Thompson Creek Metals Company Inc (USA) (TC): Thompson Creek Appears Destined To Fail - Seeking Alpha

Yeah we tore that article to pieces on the yahoo message board for TC. It had so many things wrong, but it was great for driving the stock down below $2 where a lot of us who knew the real story loaded up. Then a few days ago Thompson Creek announced they just shipped $50 million of copper gold and silver during the *startup* of the mine. The revenues in 2014/2015 are going to be up 60 or 70 percent YoY. Guess what happens to a stock price when the revenue goes up 70%?

But I still sold because you never know. Gold could drop to $600 and copper to $1.50. I don't think it would happen but I like to hedge and lock in some profits. If TC falls back below $2 on another fake article, I will probably rebuy.

 

[NW-Bound]

I have been interested in mining companies, but companies like TC are too small and under my radar. When thinking mining, I have in mind big guys like Freeport McMoran, Vale, Rio, BHP, etc... These guys still have not done that well the last 2-3 years, but are showing sign of life, now that the world economy is predicted to continue to recover. I do not care for the price of gold, but copper price has been inching up while aluminum looks to be stabilizing.

 

[NYEXPAT]

Like others here, I got burned when I went bottom fishing last year and sold most for the tax loss. What I have left is almost at break even (in a tax advantaged account) so if they continue to recover in 2014, I will be sure to get out at the earliest possible moment!

 

[Fermion]

I lost a bit in FCX (that is a really big boy) but I managed to grab some for $30 last year and then sell my $45 shares for a nice tax loss while holding the lower cost shares. They also paid me a few thousand in dividends so I should count that.

 

[NW-Bound]

FCX is actually small compared to BHP, Vale, and RIO. The latter have sales of 2X and 3X that of FCX!

 

[traineeinvestor]

Mining shares are pretty beaten down and I have been looking at them as a contrarian investment.

I pulled the trigger earlier this week and purchased shares in a mid-cap Australian iron ore producer (it would probably be viewed as a small cap in the US) and am currently reading up on some of the large cap mining companies like Rio Tinto.

 

[JacqJolie]

I've been catching a bit of a falling knife on Vale. Fortunately haven't lost too many fingers, but might make another grab for it or one of its peers. Also own some Teck that's been so-so (but the MA is bullish so I might pick up some more) and still have some SID - that surprisingly turned out to be a double +, except I sold most of it before then. Pretty sweet dividend on that one too - or it was when I first bought it anyway. I wouldn't buy it now at this price.

Also looking at adding to Terra Nitrogen and Rentech right now though and don't have a lot of cash left to buy anything anyway after the gold miner binge. Maybe that's a good thing.

 

[haha]

Yeah we tore that article to pieces on the yahoo message board for TC. It had so many things wrong, but it was great for driving the stock down below $2 where a lot of us who knew the real story loaded up. Then a few days ago Thompson Creek announced they just shipped $50 million of copper gold and silver during the *startup* of the mine. The revenues in 2014/2015 are going to be up 60 or 70 percent YoY. Guess what happens to a stock price when the revenue goes up 70%?

But I still sold because you never know. Gold could drop to $600 and copper to $1.50. I don't think it would happen but I like to hedge and lock in some profits. If TC falls back below $2 on another fake article, I will probably rebuy.

Not going to hazard a guess on gold miners, but I do think that if someone plays in this field he has to hold for a reasonable gain. It doesn't pay to run these large risks, then take off at the first signs of success. I have always looked at these as options, or lottery tickets. Once you are in, you stay in until you get a reward commensurate with the risks you take or you sell for a loss and immediately take another horse tick to ETFs so the bets won't vaporize and eventually you will be a winner. (Actually, you are winning now, which is better than my gold experience of late. You are likely taking my money!

Ha

 

[NW-Bound]

For what it's worth, Goldman Sachs just issued an advisory saying the price of iron ore will stay depressed, and it does not bode well for some miners.

 

[Fermion]

FCX posted earnings this morning, a beat on profit but a miss on revenue. The revenue miss doesn't seem that bad. If they didn't have the problem with the Indonesia mine I could see the stock being $40, but it looks like it will drop to $34 today. I might pick up a few shares...maybe use a buy-write and try to get them at $32 and collect the nice dividend.

 

[JacqJolie]

Sold some of the Goldcorp that I bought in December on Friday just short of a 25% gain. Had read the 13F filing that Seth Klarman (Baupost) dumped all of the gold miners he'd bought in Q2 in Q3 2013 and it spooked me into taking some profits. And I had to make room in my RRSP for US purchases so had to move a CAD stock out. Still think most are fairly cheap and would buy even now except I'm still too heavily weighted in them now with the gains. They sure were a big help with keeping it green for January results anyway.

 

[traineeinvestor]

For what it's worth, Goldman Sachs just issued an advisory saying the price of iron ore will stay depressed, and it does not bode well for some miners.

FWIW, the premium for pellets over fines is widening as China cracks down on pollution.

 

[JacqJolie]

Sold son out of Vale for son at a quick (1 mo) 10% gain. Sticking with the gold miners for both of us for the meantime with a stop-drop price of ~ 10%. I sold a bit of GDXJ and G at about where I thought they were fully valued. Will be happy to be pleasantly surprised.
Since the miners are about 15% of my total port and I'm up 9.1% NW YTD, am happy to be a dirty stock timer.

Disclosure - did not make 30+% in 2013.