Should you invest in miner or their commodities?

April 21, 2024

Do you own the miner or the actual commodity. Pros and cons.

In summary:

  • Commodity bear: If you are bearish on a commodity, hold neither it nor those that mine it. Neither should benefit here.
  • Cost pressures and supply challenges: If you are bullish on a commodity but see high(er) inflation and/or mining-related risks/supply shocks, consider holding the physical over the miner (unless you can find a low cost-curve miner with low-risk production).
  • Commodity bull: If you are bullish on a commodity and not worried about inflation or mining-related risks, then consider holding the miner over the physical.
  • Uncertain but want to participate: Consider not investing in either miner or commodities. Rather consider investing in those companies that supply them, such as Master Drilling Group (Read: Expect the lights to be shot out).

Read the full analysis here.

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