The Commodity Bust Intensifies—-Index Of Global Miners Now Down 80%, At 11-Year Low
Anglo American Plc led a slump in mining stocks to the lowest in more than a decade as market turmoil in China, the biggest consumer of metals, ignites a vicious spiral of tumbling equities and collapsing commodity prices around the world.
The 80-member Bloomberg World Mining Index sank as much as 4.1 percent on Thursday, with Anglo sliding 12 percent at one point to a record low and Glencore Plc down as much as 7.9 percent in London trading. The Bloomberg Commodity Index, a gauge of returns on raw materials, dropped to its lowest level since 1999 as industrial metals and oil declined.
“Commodity prices get sold off because equities are falling, and the mining equities get sold off because commodities are falling,” Wiktor Bielski, head of commodities research at VTB Capital in London, said by phone. “It’s just the vicious cycle accelerating at a pretty fast rate.”
Copper Futures Crash Below $2 For First Time Since 2009
Dr. Copper is sick. For the first time since May 2009, Copper futures prices traded with a $1 handle this morning ($1.99) as Nomura analysts warn the commodity is likely to see more downside risk over the medium term as the market is expected to remain in surplus through the end of the decade.
Marc Faber’s forecast for the U.S. stock market is frightening
Faber advises buying gold and shares of gold miners
But perma-bear Marc Faber says it could be a lot worse. The Swiss investor who publishes the Gloom, Boom & Doom Report told MarketWatch that the stock-market downturn could result in the S&P 500 hitting lows not seen in five years.
Where does an investor find shelter in this mess? Faber says gold GCG6, -0.02%which advanced to its best level since November Thursday to settle at $1,107.80 an ounce and the gold miners exchange-traded fund GDX, -2.34% which has advanced 8.5% year to date.DYI Comments: The best time to purchase bargains is when prices have been
decimated!
Mining stocks have now moved into the accumulation phase for "real" long term investors wanting to build a position in their favorite precious metals and mining fund at incredibly low prices. The accumulation phase will take a few years to work thru as mining companies consolidate through mergers and/or buyouts back to profitability. Some of course will go bankrupt but the remaining companies will purchase their assets for penny's on the dollar.
Dollar cost averaging is recommended as prices have the possibility of moving lower. Our favorite is Vanguard's Precious Metals and Mining Fund symbol VGPMX.
Updated Monthly
AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 1/1/16
DYI
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