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I just read this article -> https://www.moneyweb.co.za/mineweb/mining-companies-investment/sibanye-on-steriods/

 

And now I am wondering if I should buy them, how closely are they linked to the gold price?

 

Sibanye Share Price Chart 5 year

 

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Gold price USD oz 5 year chart

 

gold_5_year_o_x_usd.png.3e9c38da3c4e7ca93cc6ca3209a18a92.png

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What stocks should one be buying to take advantage if there is a commodity boom in 2018.

 

Sent from my SM-G920F using Tapatalk

 

Hard to say. Commodities bounce up and down like a rubber ball, and predictions are more like a gamble. However, if last year is anything to go by, I'd look at rhodium and paladium. (ETFRHO and SBAPD1)

 

In fact, ETFRHO was the top ETF in South Africa last year with over 100% returns (https://www.bloomberg.com/news/articles/2017-12-12/top-performing-commodity-etf-rides-wave-of-strong-auto-demand)

 

The reason for this upswing is the change from platinum catalysts to rhodium and paladium in the auto industry, which also explains the dismal performance of platinum.

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I read/was told about the dollar weakening and will probably continue under Trump and the person suggested that normally when the dollar weakens commodities and commodity-linked currencies tend to pick up.

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I read/was told about the dollar weakening and will probably continue under Trump and the person suggested that normally when the dollar weakens commodities and commodity-linked currencies tend to pick up.

 

That is true. But commodities are not buy-and-hold stocks because their price fluctuates wildly. They are cyclical and their behaviour looks like a cosine wave or an oscilloscope. Their average price over 10 years may be flat or even down.

 

A lot of money can be made with commodities in a market like ours is at the moment, but it requires hands-on active management. Go away from your screen for a few days and you may find the price has changed by 20%.

 

Have a look at the two graphs below. One is commodities price over 25 years, the other over 200 years.

 

Commodities are for trading, not investing. You might be able to hold them for a few weeks, but the rule of commodities is to decide your risk and decide your profit in advance. Stop your losses and take profits when you have reached your target. Never hold commodities for too long. They WILL come down again.

 

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commodity-cycle.thumb.jpg.1745d492ee27754bba95c652524d0ec6.jpg

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