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I just have one question to all the resource commodity bears.

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THRESHOLD
Super Contributor
Y - LONMIN borrowed on her credit card to pay for her month's groceries.
SimonPB
Valued Contributor
I not unhappy with red. But why try time it and potentially wait years for any return when I can just wait for the turn. My strategy on commodity stocks is simple. when the single commodity producers are 100% up from their lows I will buy. Sounds crazy but think of KIO, +100% is only R70, when things going right KIO at R70 is still going to make lots of money and until then I can do other things with the money
Vypir
Contributor
No, Lonmin borrowed on her credit card to pay off her other credit card...
G_V_V
Super Contributor
The answer is simple, the price may move up and down a thousand times between 40 and 70 before it goes up further. You need to be in those levels if you are to reap the benefit. I see myself more as an insurance provider rather than a trader. I provide support for an investor who is fearing the share going down and then sell to an investor when they feel it's safe to go long again.
G_V_V
Super Contributor
The shares in question have been blue chip share for many years.
G_V_V
Super Contributor
My greatest fear is to be in debt, it takes away my dignity.
THRESHOLD
Super Contributor
AND they mine in these areas. AND they have gone through this before eg. Zambia stripped Anglo of rights 20 odd years ago I believe.
LILA
Contributor
G_V_V
Super Contributor
Their business is to mine so if they can't help that country to mine their resources for whatever reason they will do it in other countries.
G_V_V
Super Contributor
How will they survive prices at a loss?
THRESHOLD
Super Contributor
? That's the point - and because of this the commodity prices will always be subject to these market forces and these companies will always be relatively high risk!
THRESHOLD
Super Contributor
? That's the point - and because of this the commodity prices will always be subject to these market forces and these companies will always be relatively high risk!
THRESHOLD
Super Contributor
They must mine where the resource is!
G_V_V
Super Contributor
No the point is no body in their right mind will work for a loss, there needs to be an incentive.
THRESHOLD
Super Contributor
Wrong! There is bankruptcy! You may not believe it but the vast majority of these miners simply fail! This notwithstanding the tall stories of enduring wealth that they sold to their poor benighted shareholders!
THRESHOLD
Super Contributor
AND they are working at a loss - just to contain fixed costs - any recovery of input will do. They will do what the market says. Anyway - costs vary hugely from one company to another and - as explained above - for some regimes the notion of cost is vastly different!
G_V_V
Super Contributor
You still are not getting it, who is going to produce the resources if the big miners go bust? The market knows this so prices will increase. It's only the short traders that want to see them go bust so they can make profit on their shorts. They are in for a shock when they see their profit erode when prices rise.
THRESHOLD
Super Contributor
NO! You are not getting it. Look at the share prices. Go buy them if you want! I told you they will turn eventually - those that survive. Would you have enjoyed the 80% drop in value had you been in them. Commodity prices will turn upwards - the companies... wait and see who survives! Your point - obfuscation aside , was that they would not produce if they weren't making a profit. You are Wrong, wrong, wrong! The market will clear and profits will return but - as I explained above - they will produce below cost for as long as they have to. Only once the supply clears will a deficit drive the price. This could be tomorrow or it could be years away!
THRESHOLD
Super Contributor
NO! You are not getting it. Look at the share prices. Go buy them if you want! I told you they will turn eventually - those that survive. Would you have enjoyed the 80% drop in value had you been in them. Commodity prices will turn upwards - the companies... wait and see who survives! Your point - obfuscation aside , was that they would not produce if they weren't making a profit. You are Wrong, wrong, wrong! The market will clear and profits will return but - as I explained above - they will produce below cost for as long as they have to. Only once the supply clears will a deficit drive the price. This could be tomorrow or it could be years away!
G_V_V
Super Contributor
You really think that prices will stay low forever. This will only happen if everything else drops in relation to the low commodity prices. What ever the resource are used to produce will also drop in price, which will cause deflation in everything else. Do you really think the bankers will allow it? And governments who are all interlinked with the stability of prices. House prices will drop, if that happens who will repay their bonds? There will be chaos and confusion in the meaning of money because the economy is not in the knowhow of how to handle this deflationary process.