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Global Mining Investing is a reference eBook to teach investors how to think and act as investors with a underlying theme of managing risk. The book touches on a huge amount of content which heavily relies on knowledge that can only be obtained through experience...The text was engaging, as I knew the valuable outcome was to be a better thinker and investor.

While some books (such as Coulson’s An Insider’s Guide to the Mining Sector) focus on one particular commodity this book (Global Mining Investing) attempts (and does well) to cover all types of mining and commodities.

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Wednesday, January 09, 2008

Sumitomo Metal Mining (TSE.5713) Update

Having lived in Japan, I have some interest in the equity market there. Its not where I choose to buy gold stocks - I can't speak Japanese so I can't read market reports, and its not recognised as a gold (equity) market. Having said that, those factors are helping to push gold stocks here down, creating a good entry point in this correction phase. The only gold producer I know in Japan is Sumitomo Metal Mining (code 5713) on TSE. See http://quote.yahoo.co.jp/q?s=5713&d=c&k=c3&h=on&z=m. They have a good stake in the large, high grade Pogo gold mine in Alaska, plus a small high grade mine in Kyushu. Its not the best entry because they also have alot of exposure to specialty metals refining, an area I know little about, as well as nickel, which is unlikely to fair so well in the long term. These businesses might be loss-making units based in Japan, or profitable units because of strong commodity prices (ie. margins), or based in low-cost China. No idea. I prefer Australia because alot of gold stocks, under-loved, so over-sold, you can buy company stock options in these companies, the nation has no public debt, but huge private sector debt, which will keep interest rates & AUD ($A) low, keeping gold price in $A terms high. Also as other metal prices come off (ie. interest rates rise), the $A will fall. Best entries in Australia,
Looking specifically at Sumitomo Metal Mining, the chart could not get much better. There is clear evidence that the stock is finding support at this level. People will ask why they are subdued, but in fact they are responding, its just that gold equities are being knocked down by the general equity market malaise. They were up 91yen yesterday. This is a good stock for Japanese to buy. Closing price today is Y1907.

PS: This blog entry is an update of a previous posting at www.gaijinpot.com/bb/showthread.php?t=11552 in Jun'05. Since that posting the stock rallied from Y1400 to Y3200. It will be apparent that I previously recommended this stock at a higher price below. It now represents better buying. Gold stocks have been slow to respond to the bullion price increase, plus this is a stronger support level.

Posted by Andrew Sheldon at 11:49 AM
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