News

July 09, 2008

A Bear Market Will Be Very Efficient At Sorting The Wheat From The Chaff In The Mining Sector

By Charles Wyatt

Take heart all you directors of junior mining companies cowering in your trenches and thinking the world has come to an end just because your share prices have been falling. It’s called a bear market and bear markets never last as long as bull markets. In fact just when everything is at its darkest, out pop the shrewd bottom pickers. At the end of last week John Meyer, top analyst at Fairfax wrote, “We reiterate our view that equity prices for miners should recover rapidly when new money enters the market. We believe a 'wall of new money' is waiting to enter the market from a variety of sources, and institutions will then need to compete to buy back some of the better stocks sold in recent months”.

Not for him the doom and gloom of the old fund manager who told a broker today that once the Beijing Olympic Games was over the Chinese boom would be finished. What he should have said is that when the Games are over the diplomatic veneer will be cast off by the Chinese and they will then start to capitalise on the infrastructure and labour forces in some of the most tricky countries in Africa. Primary production of metals and minerals is what they are after, and they won’t care how they get...