Rising Commodity Prices Are Enhancing Mining Stocks
We’ve seen some mining industry titans release reports showing record gains for their shareholders.
High commodity prices aren’t controllable by miners so when demand is higher such as the recent reopening post pandemic thus increasing prices, miners increase production to take advantage.
Miners are attracting attention as an inflation hedge as their product tends to rise with inflation.
Steel Demand
Steel is used most commonly in skyscrapers and bridge building projected to steadily grow at 2% a year for the next 10 years. Iron ore (used to make steel) boomed as the world re-opened.
Rio Tinto, whose main product is iron ore, saw profits of 75% last year. They pay a year half of earnings dividend which was yielding 9% – attractive in the current climate.
Hedging With Gold
Gold holds its value due to scarcity in times of inflation and printing money. Barricks can mine gold at half price production cost meaning attractive profits. They paid out record shareholder dividends too last year
Barricks is diversified with mines in 13 countries and is one of the best options in the sector. Consensus is good for the next few years with this company but there are no guarantees in an uncertain world.
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This article is for informational purpose only. It does not constitute finacial, tax or legal advice, nor is it a recommendation to buy, sell or hold any investment. Past performance is not a guide to the future, investments rise and fall so investors could make a loss. No view is given on the present, future value or price of any investment and investors should form their own view on any proposed investment.