Asiamet Resources Share Discussion Threads

[jailbird] 28/10/2018 15:32

MT,

you cannot compare stocks like that.

Everyone is looking for that golden nugget but it is not common to come across it.

I am sure there many stories where ppl had made money several thousands in paper profit and only watched to fall to zero because they never sold.

Stop talking up your own agenda

[mount teide] 28/10/2018 15:28

Like Paul Scott i've learned some very expensive lessons slicing on the way up or selling out too early. I now wait until either the value/growth story has run its course or has changed for the worse. If the investment case continues to strengthen i average up on pullbacks.

Although an extreme example, Paul said he will never forget investing £25k buying 500,000 ASOS shares at 5p and feeling very pleased with himself after selling out at 9p - today that holding is worth £30m.

[jailbird] 28/10/2018 15:14

HB,

It will happen ..it is WHEN not IF.

It is easy for ppl talk ..not everyone has deep pockets....

Ppl are buyers..but never mention when they slice on the way up.

Do not get emotive about selling..well same applies to holding or buying when markets crash

Just stick to ones own strategy and ignore noise.

Everyone has their own agenda.

[horneblower] 28/10/2018 14:49

MT. The most horrifying possibility is your last.
Extremely unlikely, it is true.
However that is precisely what happened (over a 3 year period) 89 years ago.
I'm not suggesting that this is going to happen, mainly because I don't think the equity indices are particularly oversold yet as they certainly were in September 1929.

[jailbird] 28/10/2018 14:39

MT,

"In market sell-offs panic is the worst thing an investor can do - the key is to focus on the long term and actually take advantage of market emotion.

One person’s panic is another’s buying opportunity."

Well the average PIs probably will watch their investment fall in value, and then probably not have any further money to take advantage of these 'cheap' opportunities.

A recession will certainly provide opportunity to buy back cheaper...even the stocks that are fundamentally sound.

But it depends on one's investment strategy. It is not wrong to sell or hold.

Remember how Cos are impacted differently by stock market falls/recessions depends on being a producer or still is development stage( deemed as high risk).
The big returns will come from producers IMO...as you previous posts show.

[mount teide] 28/10/2018 14:25

GSCI/S&P500 Ratio

For the Ratio to revert to the mean figure of circa 4

Some possible examples:

Commodities remain at current price while S&P 500 tanks 75% (extremely unlikely)

Commodities double while S&P 500 drops 50% ( possible but unlikely)

Commodities treble while S&P 500 drops 25% ( possible over a 3-5 year view)

Commodities quadruple while S&P 500 goes sideways (possible but unlikely)


If Commodities were to drop 25% to close to their previous cycle low it would need the S&P 500 to drop 82% ( would require a global economic collapse)

If Commodities were to drop 50% - it would need the S&P 500 to drop 88% (likely complete destruction of the global economy and decade of depression)


To put into perspective how volatile the tied at the hip, boom and bust global shipping industry has been over the last decade for the worldwide carriage of dry bulk commodities - iron ore, copper, zinc, lead, wheat, coal etc - (95% of all commodity production at some point see's the inside of a ship's cargo hold), between 2008 and 2016 the Baltic Dry Index which measures the cost of dry bulk freight rates via the spot charter rates of Dry Bulk Ships, dropped an almost unbelievable 98.2% peak to trough to the complete and blissful ignorance of 99.999% of the global community.

Imagine your house dropping in price from £1m to £18k! Its one of the reasons why today i can ship a 20 tonne consignment of Scotch Whisky to China in a 40ft container cheaper than you or i could fly there economy class.

[zho] 28/10/2018 14:13

MT

>>zho - 'but if the S&P500 tanking proved to be a precursor of a recession I would expect commodities to be hit as well.'

The exact reverse happened at the bottom of the previous two commodity cycle lows.>>

Yes, understood. That's why the graph is intriguing.

[mount teide] 28/10/2018 13:33

zho - 'but if the S&P500 tanking proved to be a precursor of a recession I would expect commodities to be hit as well.'

The exact reverse happened at the bottom of the previous two commodity cycle lows.

As a longterm investor - short of a worldwide financial collapse and decade long depression - imo the copper market fundamentals over a 10 year view are as close to a one way bet as the equity markets throw up.

In the event of the US and Europe experiencing a period of softening growth over the next few years(similar to what SE Asia, China and the Pacific Rim has experienced during 2015-2018), then should the mining sector keep capital investment close to the current decade lows it will only increase the likelihood of a massive future spike in the price of Copper.

The highly respected Nat Resources analysts at CRU(they were one of the few to correctly call the bottom in H1/2016) forecast that a huge(5 million Plus tonnes) copper market deficit over the next decade is still likely to occur even if capital investment returns to its pre recession level over the next few years - the inference being to meet future demand the price of copper will need to rise to a level that pushes capital investment to well above the peak of the last market cycle.

CRU's other concern is that the industry spent a serious amount of money looking for new copper resources during the last market cycle and failed to find very much by historical standards - and what they did find was at a much lower overall average grade.

This is the primary reason why the World's largest copper miner Codelco has decided to allocate nearly all its future capital investment to extending its operations at its existing mines into areas with very low grade ore(once deemed close to being uneconomic), since it is proving more cost effective than trying find or buy new copper resources.

Since 1980, 100% of the growth in the global consumption of Oil, Gas and Copper has come from the 88% of the population living outside of Europe and USA. Over 75% has come from SE Asia, China and the Pacific Rim. India now has the fastest growing demand for Copper and Oil.

Since 2015, despite softening economic growth across much of SE Asia, China and the Pacific Rim, their oil and copper consumption has continued to grow strongly. The 38 year oil consumption chart for this fast growing economic region is a straight line at a 45 degree angle - yet the Chinese Shanghai Composite Index since 2015 has dropped 45% peak to trough.

China's and much of SE Asia's economies and Stock Markets have already experienced the correction that US and European economies and markets are due.

As economic historian Niall Ferguson commented - far too many US and European economists and analysts continue to see only a very partial picture by not focusing the bulk of their economic/market research on the 4.2 billion population of China, SE Asia, India and the Pacific Rim - this is going to be their CENTURY not the West's which he believes will, in relative terms, experience managed decline.

As mentioned in the previous post, considering the relative stages of the global commodity cycle and the Western Economic cycle, i would expect to see over the next few years, as in the previous two commodity cycles, commodity prices rise while S&P 500 equities enter a period of sustained correction as a result of rising inflation and interest rates, after a very long positive run.

AIMHO/DYOR

Edit - i'm off to SE Asia, China and Australia for a nearly a month in late November - as a travelling holiday and to update my knowledge of the fast growing economies of this region.

[horneblower] 28/10/2018 12:22

In order to take advantage of that interesting chart it is necessary not only to buy commodities but also to sell equities.

You won't necessarily make a profit by doing only one. The chart suggests that commodities will outperform equities going forward...NOT that commodities will go up. They may go down and still outperform equities.

It certainly suggests that if you are going to be in equities at all then commodity based equities will do you better than most other equities.

[mr roper] 28/10/2018 12:09

Good post, mt

[zho] 28/10/2018 11:53

MT - that's a fascinating graph because it's counter-intuitive. If the S&P500 halved then the ratio would double if commodities kept their value, but if the S&P500 tanking proved to be a precursor of a recession I would expect commodities to be hit as well .

[zeusfurla] 28/10/2018 11:34

MT Thanks for another terrific post and chart. Although impossible to time exactly there is no doubt in my mind that your fundamental premise is right. We are at or near an upswing from the bottom of the commodity cycle. We can see the building pressure in the system as (for example) copper stocks decline, Chinese imports shoot up and wider market volatility increase. Demand for at least some metals including copper is projected to increase significantly in a much more tech driven future than in past cycles. Patience as ever is needed to benefit from this time in the cycle, good stock-picking and avoiding rash responses to increasing volatility. As Jerryspaniel said on another BB, when markets go a bit mad, take the dogs for a walk.

[mount teide] 28/10/2018 10:50

If current commodity market fundamentals and 50 years of stock market history is a reliable guide expecting commodities and their equities to follow any wider equity market correction or economic recession south is likely to be misinformed.

The S&P 500 during the 2000-2002 recession went down 46% and some 4 years later in 2006 was still in correction territory some 20% down. Copper and Oil which had both bottomed in 1999 following many years of falling prices from oversupply, actually went up by 498% and 250% respectively between 2000 and 2006 - A PERIOD DURING WHICH MUCH OF THE DEVELOPED WORLD experienced a serious and prolonged downturn.

How did the mining industry fare?

Rio Tinto bottomed in 1999 at $18 after a 5 year sector recession; by 2006 it has reached $83 DURING A BRUTAL 6 YEAR PERIOD OF HIGHLY MATERIAL LOSSES FOR THE S&P 500 AND, following two further years of boom phase topped out at $155 in May 2008.

Predictably, BHP also bottomed in 1999 at £109, by 2006 it had reached £1,168 and, £2,158 by 2008 and topped out at £2,610 in early 2010 - giving investors a 24 bagger plus dividends over a period that saw the S&P 500 return a 20% LOSS plus dividends!


Consequently, this could be the most important chart of 2018:

hxxps://goo.gl/images/VjCz8R

It charts the third generational low in the commodities/equities relationship since the late 1960s. The previous 2 lows following mean reversion were eventually followed by generational highs.

Every low occurred after a general collapse in commodity prices due to excess supplies, NOT TO ECONOMIC RECESSIONS, sharply rising equity prices and a period of strengthening dollar.

After reaching the mean, commodities kept outperforming as equities completed their bear phase. In total, equities collapsed 46% in both 1973-74 and 2000-02 from peaks reached 11 and 8 months prior to the official start of a recession respectively.

The S&P Goldman Sachs Commodity / S&P 500 Index ratio bottomed at 0.89 last June and is now 0.95. A return to the mean of 4.1 would require the GSCI to multiply by 4.3 or the S&P 500 Index to crater 77% or as is most likely the case a relative combination of both.

Equities and commodities have been rising at similar paces since mid-2016 with the latter outperforming the former since June 2017. Conditions are ripe for a strong commodity rally after a 75% bear market over 9 years.

Exploration budgets have been severely depressed and stocks have declined to near decade lows. Metal inventories are down 60% from their 2013 peak and now stand below the 2002-2004 levels; following which prices quadrupled after continually rising 2%-4% demand finally met years of increasingly limited supply.


AIMHO/DYOR

[europa79] 28/10/2018 01:11

They should of had YOU on the podcast MT!!

[mr roper] 27/10/2018 23:30

Aimraider, two weeks ago the share price was 60% higher and two weeks ago pre dates an on the hoof strategy change and pr shambles. I’m more concerned with the wider market. As hb states above, there’s a few key levels possibly about to be tested that I’m happy to be mostly in cash for should opportunities present themselves. Mange your cash and manage your risk. Each to their own.

Happy to miss out on a large chunk of a rise if they deliver on partnering Beutong. Still have 20% of my holding in the sipp as it’s a long term play...if they deliver.

Ps the market says it’s worth 40m less than two weeks ago and at one point the other week it was near 50m less. Nothing to do with me.

[aim0raider] 27/10/2018 22:36

Good luck with that Roper. Two weeks ago you had this as the best thing sliced bread, now you are saying it's only worth £60m less? Just so happens you are out now. Risky strategy, as we know it moves quickly, only takes a few drips with regards to a Beutong deal and we are up, up and away. Latest RNS hints at something, so I'm holding tight. As Hb has always maintained, it's a long term play, patience will win in the end.

[mr roper] 27/10/2018 21:53

Hb, if it gets to 4-5p, which it may do if the wider market sells off, I’ll most likely be joining you in buying

[horneblower] 27/10/2018 19:34

Imo it hangs on whether the Dow fall further than 22,000 (about 11% down from here).
If it does then that will lead to world recession rather than signalling simply a 'correction'. A correction is normal and doesn't threaten the bull run, in fact it confirms it. Anything more than a correction would confirm a reversal. In that case copper would fall even further.
I am not expecting this. I am expecting a continuation of the bull market. So, I will be buying more ARS next week.

[mount teide] 27/10/2018 17:45

marth126 - that's likely to be a result of Asia Met sitting on some serious assets - not too many junior resource stocks in 2018 will have been able to raise twice their 2015 market cap in a placing at a 1,200% premium to the then s/p.

Its also worth bearing in mind that while the brutal base metals sector downturn/recession of 2011-2016 was taking its savage toll; which saw giants like Glencore lose 85% of its valuation, suspend its dividend and exploration investment, and heavily dilute its shareholders at the market bottom to strengthen its balance sheet - fellow major Freeport saw enough potential at Beutong and KSK to spend $33m before the call went out to stop all further exploration to preserve cash.

[riotinted_specs] 27/10/2018 17:02

Thank you MT for your comprehensive assessment. I'm a new to ARS with a very recent and not unsubstantial investment at a 6.55 entry point. This coming after the BOD communications debacle and the 'so called' bad news. Im sure that I seem chirpy given I don't have any LTI baggage and have come in at a comparatively low price.Regardless, I see this as a definite multibagger even at twice the current price. One of the best investment opportunities in a very long time and for multiple reasons: - the asset now looks bigger than before.- significant potential cost saving by joining BKS and BMS at depth- the high grade copper and importantly the mysterious magnetic anomaly which points to even higher grade- the market has yet to price in the above ABOVE all and as MT pointed out the once every dozen year cyclical price surge magnified by a longstanding lack of global copper development investment. All made exponential by the clear direction the planet is taking to move our energy dependence from 20% electrification to greater than 60%. To me this is a straight copper play.

[horneblower] 27/10/2018 16:45

For myself, I expect to pick up more stock this week.
I reckon the Dow has another 5% fall in it so I will not be surprised if ARS revisits the 5p area. However it will not stay there long as I reckon there are plenty of buyers out there who will say, "Thank you very much."

[jackbal] 27/10/2018 16:36

MT I do believe that copper will perform strongly over next few years. What shape ARS will be in at that point requires more guesswork.

I would rather that share price doesn’t fall further due to my overweight holding. It would be a false economy for me to hope for further decrease in value of holding so that I can top up.

However if price goes low 5’s I will top up as a consolation gift to myself!

On the flip side I would imagine that for longer term investors than myself this recent sell off is a blessing rather than a curse for accumulative reasons.

[shanklin] 27/10/2018 16:29

MT

Great posts. It's a shame that ARS management have not had the decency to put the company's situation as clearly as you.

[markth126] 27/10/2018 16:26

Some serious players on this board mind with £500k investments in a penny stock. You must have some serious spare cash!