China – The Art of War
An article this morning titled ‘China as an Economic Superpower: The Art of War’ is one I think you ought to read – reading time 3 minutes. I commented on this article by saying “An interesting article that articulates the conclusion I have come to separately – but a far more interesting presentation than I would have made. Good work”. This article takes several ‘Rules’ from the ‘Art of War’ book and relates those rules to what the author sees as China’s current and likely future behavior vis a vis the U.S. I have been of a mind for some time that we are living in a world of serious ‘economic power transition’, and say both good ‘food for thought’ article, and ‘stay tuned’.
If you are an investor in gold mining producer equities specifically, and other mming producers generally, I suggest you read an article published this morning titled ‘Are Gold Stocks Worth the Effort’ – reading time 4 minutes.
From my perspective Mr. Kirtley has quite properly focused on the ‘cost side’ risks faced by gold mining producers – which of course equally applies to all mining producers. Mining producers face an ‘imbalanced risk profile’ as contrasted to many commercial enterprises, because their revenue streams are dictated by commodity prices over which as a practical matter they have no control. Unless there are fact specific reasons that a given mining producer is to a large degree in a ‘controlled cost’ situation I agree with Mr. Kirtley’s view of the world. That said, I think gold mining explorers are a quite different group with a very high risk profile – but potentially with a very high return profile for investors with ‘strong stomachs’ , have ‘some Las Vegas’ in them, and who know specifically what ‘exploration management’, ‘exploration factors’, and ‘explorer exit strategies’ may lead them to the potential of high returns.
It is, of course, also important to note that any serious long-term rise or fall in the price of physical gold ought to directly impact the market price of gold mining producer shares – such that there is the potential of serious leverage up or down in such share prices. That said, I for one see mining producer shares to be quite different from a risk profile point of view than mining explorer shares – with it being obvious (or in my view it should be) that the investment risk profile of any mining company – producer or explorer, and most producers are also explorers – is fact specific. Fact specific risk is what needs to be assessed when considering investing in any particular company, and general statements about mining producers (or any other ‘type’ of company irrespective of industry) ought to be seen as no more than generalities that are ‘overview commentary’ to be considered conceptually in any ‘company specific’ analysis.
The commentary above via Ian R. Campbell of Stock Research Portal.