Member Since 23 November 2015
Last Seen: 16 Nov '19

MaxMarioni's Insights

On the topic of Gold

Gold fever is declining. Other raw materials such as industrial metals however, are rallying, suggesting that the long downward cycle that has hit the industry is coming to an end. Goldman Sachs is convinced of this: for the first time in four years, it is urging investors to put their money into commodities. Just look at miners' reversals in performance: AngloAmerican has quietly abandoned its asset disposal plan which was announced only this February, showing that the goal of reducing debt is already on the way to being achieved. In the last months, raw material prices have strengthened, often with double-digit if not triple-digit rises. In the US, following Donald Trump's election to the White House, stocks belonging to the natural resources sectors were the ones who saw the biggest increase amid the post-election rally, with an 11% rise for the Eurostoxx sub-index against 8.3% for the Dow Jones. Since the January lows, Anglo and the other four big mining titles (BHP Billiton, Rio Tinto, Vale and Glencore) have more than doubled their market capitalisation. Also Glencore has stated they will restart dividend payments in 2017. In fact, Anglo and Glencore may soon regain their status as income stocks. But investors looking for a reliable, rising dividend income will remember how easily these payouts were cut. Back in January, it was been a surprise gold rally whichbrought the attention ofinvestors to commodities. But the precious metal, after a brief rally that immediately followed Trump's shock election victory seems to have fallen out of favor. With the Federal Reserve now ready to raise the cost of money, the dollar reaching its highest level in 13 years, and Wall Street churning out new records every week, bullion has lost its appeal among investors.Gold ETFs - which had grown to record-breaking pace in early 2016, are falling without interruption. If gold is losing its shine, its rise during the year to date is still 12%. But the less noble metals are shining brighter: almost all non-ferrous are up by over 20% in 2016, with zinc, nickel, aluminum and tin rising to multi-year highs on the London Metal Exchange. Even copper eventually joined the rally, overtaking the 6 thousand dollars per ton. Even more spectacular is the performance of other industrial commodities, especially those used in the steel industry, such as coke coal, which appreciated by over 300% this year, and iron ore, which has gained more than 60%, reaching the highest since two years.   (Read more)

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Other Insights on Related Shares: FRES.L
Related Shares: Fresnillo Share Price

In this period of Brexit-induced instability, examples of companies with good investment potential in the current climate are few and far between. One such example which defies the trend is Fresnillo PLC: once again a mining stock, it has been the top performer on the FTSE 100 so far this year: it has gained over 180% since January. It has lost a bit of its value (2.40%) since its peak last week, however the overall upwards trend is unmistakable, as the compelling graph below shows. The relative decline since its peak was unavoidable given its record valuation and may also result in a lower price for the stock, making it more appealing to investors. With it however comes a record P/E share, 252.6. The stock has a market capitalisation of £13.780 billion. (Read more)

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Topics: Commodities, Gold
Other Insights on Related Shares: GOLD.L, RRS.L

It is something of a cliché, during a period of intense volatility such as the present one, for investors weary of an incoming crisis to seek refuge in what is perceived as the safest asset class of them all – gold. This tends to hold true even when commodity prices are falling as in the current situation. However there are ways to invest in gold without accumulating huge bars of the shiny metal in the basement, which are safer and more convenient than owning bullion and carry the possibility of capital gains. Listed gold mining companies are often described as a “safe haven”, and present a “golden” opportunity for investment. (Read more)

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