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Finally! It's time to buy resources again!

by , 02 May 2014

When you think about it, we've been through a crazy few years... The prices of stocks and bonds have soared, thanks to the Fed's long-term commitment to near-zero-percent interest rates.

But surprisingly, investors have completely left commodities behind - so far.

In fact, resource shares have a had a horrible time in the past couple of years.

Between February 2012 and November 2013 the Resource Index dropped a full 27%.

But that may be changing - right now.
My indicators are flashing resources as buys right now!

A handful of resources that I follow closely, specifically ferrochrome, PGM metals and coal, are all shouting buy right now!
  1. Ferrochrome: Since 2012 the ferrochrome price in rands has shot up around 30%.
And our local ferrochrome producers are in prime position to cash in on this growth.

Take Merafe; it's one of the world’s top producers of ferrochrome and it's just announced big production increases.

It’s also doubled its profits in the past year.

And the good news is, in a news announcement from last week the company said the price its getting for ferrochrome has gone up!
  1. Platinum: Strikes could remove as much as 2.5 million ounce of platinum from the market this year…
The platinum sector has seen its three largest producers freeze over as workers have been on strike for the whole year so far. In fact, the big three mines have already lost 1.1 million ounces of platinum production thanks to the strikes.

But what most people have asked me is, with these mines not producing platinum, how come the platinum price isn’t sky high yet?

Well, car makers and other platinum consumers have big stockpiles of the metal. And so do the mines. So in practice, the general platinum market has not been too disrupted by the strikes so far.

But the fact is – with the strike dragging on as they have been - these stockpiles are running low.

Now, the big platinum miners are saying that, even if the strike is resolved in the next week or two, it could take them up to August to get back to full production. And by then, as much as 2.5 million ounces of planned platinum production will have been taken out of the market.
With that much of the shiny metal gone, consumers will have to restock, in a big way.

And when these consumers restock I expect the platinum price to start its steep climb. This’ll be towards the end of this year, 2015… And I’m ready to take advantage of it with a platinum miner that’s been strike free and has recently nearly doubled its profit for the year.

If you’d like to know more check out my Resource and Scarcity Report.

              3. Coal: The resource buying opportunity no-one’s talking about (yet)

Coal is always the underdog when it comes to resource investing. It’s not pretty like precious metals and diamonds, and it’s not high priced like other metals either.

But the fact is, there’s a massive opportunity to make money from coal production IN SOUTH AFRICA.

You see, South Africa is heading towards something called the Eskom Coal Cliff.

In short, Eskom’s supplier’s mines are reaching the ends of their lifetimes. And the amount of coal Eskom has contracted for its power plants after 2015 is tiny.

In fact, some estimates show that Eskom could have coal shortages as large as 60 million tonnes by 2016.

The CEO of Wescoal Mining, Andre Boje, put the problem like this: “In 2015, there’s a supply cliff for Eskom. Where are the 60-million tons they need going to come from? I haven’t got the answer. That’s a scary number, and you have got to be investing now to have the coal then”.

So, if you thought our biggest problem was not enough power plants, you are wrong. Even the few operational power plants that we still have could very likely run out of coal unless there is some big investment in new mines…

That’s why, together with ferrochrome and precious metals, coal is one of my SHOUTING BUY opportunities in the resource sector right now…

If you’d like to know more about these three major resource opportunities and the best shares to take advantage of each of them right now, make sure to read my research in my Resource and Scarcity Report right now.

Here’s to unearthing resource profits,

Francois Joubert

Editor, Resource and Scarcity Report


Finally! It's time to buy resources again!
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