d_teller

How Low Can Mining Stocks Go?

Many of the mining companies have decreased or shuttered higher cost operations, those that require expensive remediation, sulfuric acid, or are energy or warter hogs in energy tight areas, or the parched regions of SA, Aus and S.Africa. Small and Junior precious metal miners are also most exposed to the tightened credit problems.

The Baltic Dry index drop not only reflects earlier fuel costs, but also the deleveraging of bets on commodities' prices by SWF's and Hedge funds.

However, many sound shippers (who've contracted lease rates through 2010-2011) have seen their valuations cut to half of book value :EGLE & GNK (Eagle and Genco) are examples, and may represent reasonable entry points.

On this site a comparison of Freeport_McMoran to Southern Copper, indicated a relative advantage for FCX, but if PCU can resolve the Asarco problem, it will have similar valuations. I like to look at long-term (5-10 yrs) of the charts to see the cycles, and I buy when the dividends seem secure.

The spot price of copper below $2.40, earlier this past week, was a cautionary note concerning the increasing slowdown worldwide ...some call it "Dr.Copper" as a measure of the worlds's healty commerce and growth.