Vukosi Fungeni

A LITTLE ON SA MINES, SHOULD I INVEST OR STAY AWAY

In Financial Management on July 5, 2012 at 23:13

I was studying some of our listed mining companies this morning and I just don’t see how we can afford to add more pressure on the industry. The suggested policy direction seems quite haphazard to my sight. It would appear that there is enough distress on the industry, but nobody (especially the important folks) seems to care about the reported volumes losing jobs etc. Maybe I’ve got a short term view on the subject matter.

Most mining shares have shaved off some pretty substantial value in the recent past, which creates a good opportunity for people like myself who can afford the risk (if only I had the capital) to get into the industry now, whilst the shares are distressed.

I am not too sure about Platinum, it seems to be on thin ice, so I would rather bet on gold instead and take a long term view (up to 7 years).

I have observed a few analysts predicting that some of the Platinum mines could consider cutting back their production/output to push the price upwards, as most are trading very close to breakeven point  (with the USD/Oz at record lows).

The overwhelming push for Palladium also adds my anxiety about the future of Platinum. However, we should not be haste to write it off, because it is very important to the world for its use in jewellery and needless to say we produce pretty much all of the world’s supply.

My take is ….

“Buy gold whilst it’s cheap and as for platinum…. I am too young to know”

 

Mr Vukosi W Fungeni

Managing Director (CEO)
GONDO Consulting Services
Email:   vukosi.f@gondoconsulting.co.za
Mobile:  +27 83 260 0797

http://www.gondoconsulting.co.za

  1. Generally, Yes it is a good idea to invest as the gold prices are cheaper, however a magnified analyses is needed to determine the cause of the gold prices dropping, and when will the price recover (so as to start getting a return on your gold investment.).so heres the thing…..SA gold prices started tumbling once it was hit by concerns about a worsening debt crisis in the euro zone following political deadlock in Greece which fueled risk aversion and put pressure on the euro. now the question is when will Greece receive a concrete financial bail out so as to see gold prices recover again……Therefore I think once the IMF and other countries put down contracts in place which will be sufficient to temporarily relief Greece and the eurozone of its debt.

    In conlusion yes you may buy now whilst prices are down but if they will remain down or a very long time then its not worth investing but should there be a reasonable turnarround time of the gold prices recovering (depending on certainties of the Greece bailout) then go ahead and invest.

    My 2 cents opinion,

    Mandisa

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