Tag Archives: Base Metals

Crypto -vs- Actual Miners

We have been following the progress of mining sector securities for quite some time now (Because You Know I’m All About That Base, ‘Bout That Base, Base Metals).

The arguments supporting this trade are:
a) reduced capex and lack of investment in new mines
b) long lead times to new supply (it takes around nine years to build a new copper mine)
c) simultaneous global growth and a resulting increase in demand
d) management commitment to returning cash to shareholders

Given the hysteria around crypto currencies and the resulting incentive to ‘mine’ them, we decided to compare the market capitalizations of the largest publically traded mining companies in the world to the largest crypto currencies. The results were quite interesting: the top five crypto currencies were worth around the same amount as the seven largest publically traded miners on earth.

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We are pleased to announce that our weighted average return in December was +2.72%, resulting in total net return of +18.39% in 2017. Since 2015, we have generated a net return of 37.30% with a Sharpe ratio of 1.48.

In terms of investment strategy performance, our weighted average net returns were (a) +4.34% for conservative strategies, (b) +15.34% for balanced strategies, and (c) +28.40% for aggressive strategies.

In our November commentary, we mentioned that many of our favoured sectors had performed poorly. In December, they stormed back with a vengeance. Our largest individual equity holding – Canadian mining company Teck Resources Ltd. – rallied 15%. Our largest equity fund holding – the Polar Biotechnology fund – increased by 4.75%. Both have continued to trade up strongly in the New Year.

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On Nickel and the Battery Revolution

If you have been reading this blog, you will have understood that we quite like the prospects of base metals and base metals miners (Because You Know I’m All About That Base, ‘Bout That Base, Base Metals…).

Here is a nice primer on nickel’s not-so-know role in electric vehicles: Nickel: The Secret Driver of the Battery Revolution

Here is some more info on how analysts have been upgrading their pricing forecasts:

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Because You Know I’m All About That Base, ‘Bout That Base, Base Metals…

People tend to get preoccupied with things that are shiny. Investors often fall prey to the same instinct – especially those that are obsessed with gold. Such people are often referred to as ‘Gold Bugs’.

This years, Gold Bugs have been excited to point out that gold has outperformed the S&P 500 index year-to-date:

Congratulations! However, there is a far more interesting metals trade going on at the moment: base metals.

After a slow start to the year, base metals such as copper (sometimes referred to as “Dr.Copper”), zinc, and nickel have seen their prices appreciate significantly:

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