The world is brimming with metals and minerals. Companies in virtually all countries seek, explore, and mine these commodities (or specialty chemicals/products) we use in today’s civilisation.
Investors and corporates allocating capital, routinely take advantage of information asymmetries to discover and invest in undervalued opportunities every year, and many can be located outside of the traditional locations for a particular mineral -i.e. the top 5–10 producers with strong growth, and/or hosting large reserves-, and often with a higher inherent risk, whether political or otherwise.
We believe that diversification involving taking positions in commodities already in your portfolio but within more traditional locations can derisk your main holding, and overall.
In that spirit, a sensible approach could include allocations in the following:
- Silver: Mexico and Peru
- Copper: Chile
- Gold: Australia and the US
- Lithium: Argentina
- Nickel: Canada and Brazil
- Cobalt: Australia and Canada
- Zinc: Peru and the US
In a world where capital raising efforts rely on having the right story to tell in front of prospective investors, marketing permeates everything we do and read. Hence, this approach can work at the project portfolio level as well, for mining corporates. The easier to tell the story is, the quicker it will be assimilated by the market.
Have you ever tried this strategy?
And that is it for today. We’d love to hear your thoughts. Reach out on our social media channels to chat, and also find additional resources here. See you next week!
The Weekly by Synergy: 5-minute musings on the markets, current trends, and events. From our opinions, observations, analysis, and news commentary, just a few lines to get you started every week.
Disclaimer: Our content is intended to be used for informational and educational purposes only. For more details, see our full disclaimer.