THE COMMODITIIES BOOM IS NOT OVER!
I don't know about you guys... but it has been a pitiful 22 months on the Canadian markets. Especially if you have been a materials investor. Increasing risk sentiment, stagnating global market growth and political gridlock eliminating any progress in the developed world has combined to put the worst sentiment on this sector since... well since this run began in 2002.
Certainly if you are a value investor you are buying when the blood is in the streets and everything is dirt cheap. But where is the growth? If you want growth where are you buying?
Well realistically... growth stocks have all but disappeared from the landscape.
Gold stocks, pretty much still at all time low valuations when compared to ounce in the ground and POG. Iron ore and copper stocks. They have been aboslutely decimated with hard landing concerns in China. Great value for the investor... but you might have to wait another year for any lift. Maybe not... we might get V recovery in China but places like India, Russia, Africa where we are looking for grpwth to replace Chinese raw mateiral demand may not be ready to pick up the slack.
Certainly when you look at India's urbanization rate of jsut over 30% of the population living in the cities... a change in policy similar to China could spur another huge wave of comodities buying. With similar population totals and urabanization rates when China started on a path of urbanizing its population India could spur a wave of commodities growth similar to the one China fuleed over the last 15 years. Certainly over population, mechaisation of agricutlture. land conservation and other issues and quality of life as well as other issues will put pressure on Indian leaders to follow the Chinese model.
Couple that with the fact the Chian still plans on urabanizing antoher 300M to 400M people... the trend in China is far from over.
At any rate... THE COMMODITIES BOOM IS NOT DONE. There is still room for a least one or two more waves of growth over the next couple of decades. You cannot epect the same type of materials demand from Russia because their population is urbanizaed and trending the otehr way... but India could be a carbon copy story to that if China. Then ther is Africa. The last developing frontier.
At any... you can't count on the regular cyclicals to make you money this year and for the most part I am looking towards September 2013 as a possible date for a resumption of the Super Commodities Bull... but remember ... it doesn't have to and we could consolidate for the next 5 years.
Ya I said next 5 years. That is a long time to not make any money... but mind you... that is my worst case scenario.
Looking for growth in the mateirals secotor????
Anyone who likes to make money... I would be lookign straight at the graphit companies this year. There is no other sector that has the potential to expand at an exponetial rate.
Between the explosion growth of lithium ion batteires and the revolutionary eV's that are starting to spot the automobiles consumer landscape and the revoluaiotnary discovery of Graphene... something I have billed as the NEW STEEL... there is no better market to set yuorself up for the long term.
Why is graphite more like the uranium multiyear boom than that of the REE boom and bust?
Simple. Potential demand and scale of the market. We are talking about a market that can growh from a milion tonnes per year to 10Mtpa over he next 20 to 30 years. And no... I am not exaggereating. a 10% to 20% EV saturation int eh market could lead to 2Mt to 3Mt market just for lithium ion batteries.
And then there is graphene... NO OTHER MATERIAL IN THE 21ST CENTURY WILL COMPLETELY ALTER THE WAY WE BUILD THINGS. The first apllications coming to an assemebly line near you will be coatings. Pretty much coating any thing and everything with a layer of graphene.
At any rate... Graphite stocks look liek the best investment in the entire matierals sector and the entier group has been getting a very nice lift in December showing signs that the sector has bottomed.
LOMIKO IS STILL THE BEST INVESTMENT WHEN EVALUATED ON POTENTIAL RETURN.
Buy Lomiko in the New Year. You will thank me. Look at Northern Graphite run to a $52M market cap and it ain't stopping. Lomiko has an identical deposit to NGC. Jumpo Flake 50Mt to 100Mt depending on cut-off... the best mining metrics in the industry as far as a open pit resource.
Lomiko is a $4.2M market cap company. There is no better investment opportunity in the sector.
Don't beleive me..? Jsut put all of the graphite guys in one protfolio and start them at zero.
- Lomiko Metals LMR-V
- Northern Graphite NGC-V
- Focus Metals FMS-V
- Energizer Resources EGZ-T
- Mason Graphite LLG-V
- Zenyatta ZEN-V
- Flinders Resources FDR-V
- Standard Graphite SGH-V
- Graphite One GPH-V
These are the companies that have resource or will have a resource shortly. Lomiko will be the biggest percent gainer in 18 months.
There is also Big North NRT-V doing amorphous in Mexico and some other dudes with an amrophous deposit in the states. First Graphite as well.. but as their name does not speak of... they are far from First and are quite slow. That being said their properties in Saskatechewan may be better than SRK Deep Bay with high grades and a wide range of graphite. Grade is always very enticing... especially if it has large flake as well as purity but it is not NECESSARY is is demonstrated by 3 mines in Canada in production or goin gtino production at a 2% grade.
What is most important is quality, which seems to be associated with the graphite in the Saskatchewan as well as the Grenville province in Ontario and Quebec.
Of all the materials sector stories going... the graphite story seems to be getting another shot this year and has the most positive sentiment in my opinion and still with most companeis closer to their lows than yearly highs.
Right here in Graphite... you have very good potential in the buy low model of investing with the timing being as good as it gets.
Ya copper has bit of a supply crunch and so will gold as more people turn to buing precious metals as reserves/savings instead of bonds... but you can never accurately predict the timing of the betinning and the end of any given market and from the action I have seen...
Graphite seems like the easiest bet for a decent run into April of this year again likelast... Although I doubt this time there will be the "euphoria" that pervaded the market for 4 months last year.