Commodities investing

[MartyMcFly]

Oil had kind of crashed...do you think it's going up more?

I bought some more today hoping it is just a dip as people overestimate how much the Middle East can help. I regret not selling yesterday though and then rebuying even more at a better price. I think there was a lot of enthusiasm yesterday and people panicked and felt the need to buy in. Usually extremely fast rises come with a minor dip on the same day or the next day (of course this is not always the case).

Stock prices are still much lower than 2018 and gas prices are higher and the president wants to make gas prices go up even more. I wouldn't be surprised if European leaders decide to stop buying Russian oil. They have proven to have deaf ears when it comes to the concerns of their citizens on issues like the vaccine passports and 3rd world immigration. I am sure they will feel good about hurting the simple-minded proletarians as they shout 'ban Russian oil, slava Ukraini.'

 

[C-Note]

Tsingshan Holding Group was the one doing that big short. I guess they were hedging.

I guess this shows why one should hold a broad diversification of commodities, so you can take advantage of these kinds of things when they happen. I only had partial success, however, even though I had some nickel stocks. I was able to sell my Sumitomo Mining stock on the last of the squeeze action today, but my Polymet sell didn't execute.

By the way, I heard someone mention today that if oil and gas prices stay high, some industries may start looking towards synthetic oil and gas. So, companies associated with that industry may get a bump over the next few months.

 

[road_runner]

I find it interesting that despite war, nuclear threat and oil embargo UVXY (volatility) barely budged and haven't even reached into oversold territory, while normally it does it based on more minor stuff; VIX spike had not even reached January levels.

 

[typtre]

I'm happy to just sit on the tobacco dividend. Whatever happens, people smoke and the profits are about as solid as you can get. I've just dipped into Bitcoin as well. Put a little bit in at just under $40,000 per BTC. It looks like Bitcoin has reached a floor, I'm a little nervous about it, it's more speculative but balanced with other investments I think it has a role in a portfolio. Did you use a crypto exchange or do you have your own wallet?

$BTI as in British American Tobacco

Oil had kind of crashed...do you think it's going up more?

Yes. The supply destruction that is happening is uncanny. It almost looks like a controlled demolition of the Western economy and I presume central banks stand ready to buy it all when industry after industry succumbs to the ever higher oil price.

*ghost busters theme*
And who they gonna blame?
RRRR-USSIA!
Dununuuuunununu. Du nu nu nu nuu nuu.

 

[Blade Runner]

$BTI as in British American Tobacco


Yes. The supply destruction that is happening is uncanny. It almost looks like a controlled demolition of the Western economy and I presume central banks stand ready to buy it all when industry after industry succumbs to the ever higher oil price.

*ghost busters theme*
And who they gonna blame?
RRRR-USSIA!
Dununuuuunununu. Du nu nu nu nuu nuu.

BTI and Philip Morris are good calls, the later probably better because it has acquired so many companies that Luke Gromen calls it a price control/cartel in America. BTI has been going down in price though for many months, so its value might be somewhat higher. The problem with most equities now is the fear that a huge drawdown will cause collateral damage on all stocks, and most of us are predicting that so buying now when we think next year is bad for everyone is a hard thing to do.

I think uranium, oil and lithium (mostly fake but a green/EV propaganda play) are the best of the commodity trades. Gold stocks could be too, but it seems physical might be smarter for people to get into.

 

[typtre]

BTI and Philip Morris are good calls, the later probably better because it has acquired so many companies that Luke Gromen calls it a price control/cartel in America. BTI has been going down in price though for many months, so its value might be somewhat higher. The problem with most equities now is the fear that a huge drawdown will cause collateral damage on all stocks, and most of us are predicting that so buying now when we think next year is bad for everyone is a hard thing to do.

I think uranium, oil and lithium (mostly fake but a green/EV propaganda play) are the best of the commodity trades. Gold stocks could be too, but it seems physical might be smarter for people to get into.

Interesting... But it pays less of a dividend - and the track record of dividend payouts by all of them are stellar. Should the stock market turn I would rather be "stuck" in BTI or Altria with their ~7% divies. I picked BTI now because while every other company rush to shoot themselves in the foot on Russia, PM included, BTI seem to be the more reluctant to do the same - scaling back marketing while PM scales back manufacturing If one can trust what any tobacco company says. They also have the most absurd ESG statement - "Building a Better Tomorrow (trademarked)".

Tobacco group BAT suspends Russia capital investments, scales back marketing

Camel and Lucky Strike cigarette maker British American Tobacco Plc said on Wednesday its business in Russia continued to operate, but that it had suspended all planned capital investment in the country following the Ukraine invasion. BAT, which has 2,500 workers in Russia and major local...

finance.yahoo.com

Though the main reason to go with BTI is... they own the Peter Stuyvesant lifestyle - the international passport to smoking pleasure!





Lithium? Interesting take. Why lithium instead of say copper or nickel?

 

[typtre]

 

[C-Note]

Lithium? Interesting take. Why lithium instead of say copper or nickel?

There are various predictions out there on what future demand for battery metals will be, like this one:

Infographic: Electric Cars Boost Metal Demand

This chart shows the demand increase in precious metals and materials between 2019 and 2030.

www.statista.com

Lithium seems to be getting the most hype out of the battery metals, followed by nickel. Personally, I feel that graphite miners offer the best value right now for battery metals investors. However, lithium mining prices have come down a little from their highs a few months ago when there was a rush on lithium. Battery makers are trying to move away from using cobalt because most of it comes from the Congo.

 

[BasedBaker]

I've never dabbled in futures, but with the current state of affairs I'm very interested in shorting the stock market, namely the tech industry and longing items such as palladium, potassium, wheat and other strategic resources before the Russian rebuttal hits. What platform do any of you recommend using? I see TradeStation is pretty popular, but am pretty ignorant on how to get started.

 

[road_runner]

Oil exploration and pipeline companies should do well, looks like.
The idea is that even if/when oil comes down from current high it won't come down low enough, also their current operations have much cheaper oil priced in so they should have good earnings. Plus the need to replace any lost Russian supply.

 

[Kit]

I'd offer a word of caution about shorts or buying on margin. That is moving beyond investing and toward speculation. At the very least, it is exponentially more volatile and risky. Unless you are seriously financially sophisticated, be very, very careful, you can end up losing more money than you invested in the first place.

 

[road_runner]

I'd offer a word of caution about shorts or buying on margin. That is moving beyond investing and toward speculation. At the very least, it is exponentially more volatile and risky. Unless you are seriously financially sophisticated, be very, very careful, you can end up losing more money than you invested in the first place.

Futures is another good way to get wiped out, I think. Leveraged ETFs held for too long is also a good way to lose money and some of them are time-decaying.
I've been reading a book on wartime investing and learned that Churchill got completely destroyed in the stock market and ended up in huge debt and bankrupt after investing on margin - he supposedly had no clue about his margin as the broker misunderstood the instructions. He almost had to sell his childhood home and land but was bailed out by his rich friends who loaned him a lot of money under house collateral.
Economist Keynes ("keynesian economics") - got wiped out in the market in the same decade too, because of being long commodities when they collapsed.

 

[BasedBaker]

but was bailed out by his rich friends who loaned him a lot of money under house collateral.

*Natty Rothchild

 

[MartyMcFly]

I'd offer a word of caution about shorts or buying on margin. That is moving beyond investing and toward speculation. At the very least, it is exponentially more volatile and risky. Unless you are seriously financially sophisticated, be very, very careful, you can end up losing more money than you invested in the first place.

I agree. Even experts can't predict the future. 'Never invest what you can't afford to lose' will always be the most important piece of advice to follow and can't be repeated enough.

At least when you buy a stock normally (vs. futures), you can hold on to the company as long as you want (or until it goes bankrupt in the worst case). Commodities tend to have cycles and if you are patient and the company is reliable, usually the stocks will go back up and if you reinvest the dividends you will have more shares as well.

All stock market investing is gambling in a way (unless you have special insider information). However, futures seems like playing roulette with only a 50% chance of going your way because you can't hold it for 5-10 years if things go bad in the short-term.

 

[C-Note]

Today the Mexican Senate voted to nationalize the nation's lithium reserves. So, right now might not be a good time to invest in a lithium mining company whose main prospects are in Mexico. One that comes to mind (and unfortunately I have some shares with them) is Advanced Lithium (OTC: ADGCF).

 

[typtre]

Concerning. I think we will see more of these attempts to nationalize. Nothing set in stone yet though.

BNamericas - Mexico lithium reform faces legal pitfalls

A bill to bring lithium resources under State control, which was fast-tracked into law this week, may lead to lengthy lawsuits as mining firms seek to protec...

www.bnamericas.com

But constitutional changes may still be required to achieve this, according to Mexico’s association of mining engineers (AIMMGM), one of the most powerful industry bodies.

“If the issue is to reserve the utilization of lithium exclusively for the state, it is not appropriate to reform the mining law. What would need to be changed is the constitution,” the association said on Twitter.

This is because the constitution establishes the system of concessions for mineral exploitation, and only reserves oil, hydrocarbons and radioactive minerals for the state.

As a result, the amendments to the mining law are at odds with the constitution, according to the AIMMGM.

 

[C-Note]

Concerning. I think we will see more of these attempts to nationalize. Nothing set in stone yet though.

BNamericas - Mexico lithium reform faces legal pitfalls

A bill to bring lithium resources under State control, which was fast-tracked into law this week, may lead to lengthy lawsuits as mining firms seek to protec...

www.bnamericas.com

Even though it might not end up happening, I went ahead and sold my ADGCF stock a few minutes ago. Even though I took a hit on it, I'd rather take what's left of the investment and put in something else while the mining companies with lithium claims get into an extended battle with the Mexican government.

 

[C-Note]

Lithium Americas (NYSE: LAC), a Canadian company which is poised to become a major lithium producer with two properties in Argentina and one in Nevada, announced today that they're splitting into two companies, Lithium International for their South American prospects, and Lithium Americas for Nevada. They say that it's to "maximize shareholder value" which is true, but they're not telling the whole story.

I believe they expect Republicans to take control of Congress this year, and perhaps the White House in 2024. Republicans have made it clear they don't want the US government subsidizing companies that have a large investment or control from China. One of LAC's biggest stockholders is a Chinese company. The US government has started giving grants to rare earth and battery metal companies and LAC evidently wants to be eligible. So, I expect that they're moving the Chinese company's shares into the South American company, or at least trying to reduce the stake they have in the Nevada operation.

It looks like the split will occur early next year. If I understand correctly, if you buy shares in LAC before then, you'll get a proportional amount of shares in each company when the split takes place.

 

[zoom]

Newmont, the largest gold mining company in the world by valuation, now has a 5.8% dividend yield.

 

[inthefade]

Newmont, the largest gold mining company in the world by valuation, now has a 5.8% dividend yield.

32 years of consecutive divs as well