Energy / Resources
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Should you buy gold?
Roger Montgomery
September 6, 2016
A bubble blown large enough will inevitably pop. And as gold bugs pump up the price of the precious metal, we hasten to warn our readers that this, too, is a bubble that will, sooner or later, burst. Moreover, gold is not a long-term investment. Our advice is to heed the words of Warren Buffett and stay away from gold. continue…
by Roger Montgomery Posted in Energy / Resources
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Fallout from the Perfect Storm
Ben MacNevin
July 7, 2016
Despite Australia’s comparative advantage in natural gas reserves, domestic residents are likely to pay higher prices due to large-scale export contracts. AGL Energy warned about this perfect storm in 2013. Three years later, the storm has arrived, and the company is now feeling its effects. continue…
by Ben MacNevin Posted in Energy / Resources
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China’s steel production jumps 10 million tonnes
David Buckland
April 27, 2016
According to the World Steel Association, global production for the March Quarter 2016 was 385.7 million tonnes, down 3.6 per cent year on year from 400.3 million tonnes. China’s production for the March Quarter 2016 was 192.0 million tonnes, down 3.2 per cent year on year from 198.4 million tonnes. continue…
by David Buckland Posted in Energy / Resources, Insightful Insights
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What could blow up next?
Roger Montgomery
April 26, 2016
Experience in financial markets has taught us that while we cannot predict markets or prices we do know that they frequently move in a way that causes pain for the majority. Even Buffett and Munger observed this when they noted the stock market is designed to transfer money from the impatient to the patient. continue…
by Roger Montgomery Posted in Energy / Resources, Foreign Currency, Insightful Insights
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World’s biggest goes bankrupt
Christopher Demasi
April 16, 2016
The world’s biggest privately owned coal producer officially went bankrupt on Wednesday morning in the US. The announcement that Peabody Energy had filed for Chapter 11 bankruptcy protection may represent the end of an era for a miner founded in 1883 with just $100, a wagon and two mules, but the fundamental pain in the coal industry will continue. continue…
by Christopher Demasi Posted in Energy / Resources, Insightful Insights
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Can you trust a progressive dividend policy?
David Buckland
February 26, 2016
With the release of their interim results for the half year to 31 December 2015, the Board of Directors at BHP Billiton Limited suddenly realised they weren’t overseeing a toll road business, which typically raises its prices by a few per cent per annum, and finally disbanded their “progressive dividend policy”. After paying out US$0.62 per half-year in each of September 2014, March 2015 and September 2015, BHP’s upcoming interim dividend has been cut 74 per cent to US$0.16 per share. continue…
by David Buckland Posted in Energy / Resources, Insightful Insights
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Why are we bearish on the oil price?
Andrew Macken
February 16, 2016
In this blog, we describe the framework for how we think about commodities and use it to explain why we believe the oil price will likely stay lower for longer. Montaka has a number of positions in the portfolio that will profit from such a scenario, on behalf of clients. continue…
by Andrew Macken Posted in Energy / Resources, Insightful Insights
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The Canaries in the Coal Mine
David Buckland
February 10, 2016
The severe decline in the commodities complex associated with slower economic growth, particularly from China, has seen Emerging Markets selling their holdings of US Treasuries in order to stop their currencies declining too rapidly. continue…
by David Buckland Posted in Energy / Resources, Insightful Insights
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The Steel Bears Are Winning – Part 2
David Buckland
February 5, 2016
Back on 16 March 2015, the conclusion from my blog entitled “China Dumping Steel Is A Cause For Concern” was global steel production had already reached a turning point. continue…
by David Buckland Posted in Energy / Resources, Insightful Insights
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Mean reversion
Russell Muldoon
December 5, 2015
A lot has been written about the woes of the resources sector recently with a similar amount of energy spent trying to work out when is the right time to expect ‘mean reversion’. A simple theory that although sounds complex, really just suggests that prices and returns eventually move back towards the mean or average as time periods are extended. Given the resource sector has been a material underperformer of late, the theory suggests you should reallocate a portion of your portfolio to such businesses in the expectation (or hope) that if such an event occurs, recent underperformance will lead to outperformance.
Sounds good in theory.
by Russell Muldoon Posted in Energy / Resources, Insightful Insights
