{"id":1092,"date":"2024-02-15T12:58:21","date_gmt":"2024-02-15T12:58:21","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/02\/15\/gwen-preston-building-a-successful-portfolio-with-uranium-gold-and-copper-stocks\/"},"modified":"2024-02-15T12:58:21","modified_gmt":"2024-02-15T12:58:21","slug":"gwen-preston-building-a-successful-portfolio-with-uranium-gold-and-copper-stocks","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/02\/15\/gwen-preston-building-a-successful-portfolio-with-uranium-gold-and-copper-stocks\/","title":{"rendered":"Gwen Preston: Building a Successful Portfolio with Uranium, Gold and Copper Stocks"},"content":{"rendered":"

Building a successful portfolio of mining companies can be challenging. <\/strong><\/p>\n

It requires a delicate mix of knowledge, timing and patience, as well as an understanding of commodities prices. <\/p>\n

At this year\u2019s Vancouver Resource Investment Conference (VRIC), Resource Maven Gwen Preston used examples from the uranium, gold and copper sectors to outline different strategies to use when creating a mining portfolio. <\/p>\n

She explained that when starting out, investors should ask themselves a few critical questions: What is happening with the commodity the company is focusing on? What stage is the company\u2019s project at? And what is the investor sentiment?<\/p>\n

Answers to these questions can help time an investment in a particular company, and can help investors decide what metals they believe in. Ultimately, this knowledge can help them decide what kinds of stocks to buy. <\/p>\n

\n

Uranium stocks to focus on now <\/h3>\n

Using uranium as her first example, Preston explained how the price has moved over the last several years.<\/p>\n

\u201cI love uranium as a bit of a case study for metals investors, because uranium spent six years from 2016 to 2022 working through excess supply. The spot market was oversupplied, it was sloshing around, you couldn\u2019t get any momentum in the uranium spot price,\u201d she told VRIC attendees, adding that there\u2019s no public market for uranium.<\/p>\n

\u201cKazatomprom (LSE:KAP) is responsible for 40 percent of the world\u2019s production. Their cutbacks in 2016 and 2017 helped right the market when it was drowning,\u201d Preston continued. She noted that supply and demand have tightened, especially now that Kazatomprom has said it won\u2019t make guidance this year. \u201cTheir return to full production was supposed to help fill the gap that we\u2019re now facing, and now that help has been delayed by several years because they can\u2019t get sulfuric acid. And because they weren\u2019t putting enough money into building their wells, which you really need to do if you want to keep your production going at an in-situ recovery uranium mine,\u201d she said.<\/p>\n

The uranium market is also being impacted by a growing geopolitical east-west divide. Preston mentioned that in December 2023, the US House of Representatives passed the Prohibiting Russian Uranium Imports Act, which proposes that the country limit imports of Russian uranium. She suggested this will have a knock-on effect that will not only limit Russian uranium, but will also limit any uranium coming through the port of St. Petersburg.<\/p>\n

\u201cIt\u2019s literally bifurcating the market. Back in the Cold War era we used to have two uranium spot prices. We had a free country spot price and we had an Eastern Bloc spot price \u2014 we are literally going back there,\u2019 she said. <\/p>\n

For investors, the takeaway is that uranium is happening now.<\/p>\n

\u2018This is not a speculation market, this is a fundamental market where we don\u2019t have enough uranium,\u201d Preston said, adding, \u2018In a market that\u2019s this fundamental and has this much \u2018umph\u2019 in it, you can play across the spectrum.\u2019 <\/p>\n

She noted that while companies with advanced projects have moved \u2018significantly,\u2019 pre-discovery explorers haven\u2019t seen much momentum. \u2018You can argue that there\u2019s likely some easy upside in the pre-discoveries as the market just decides to really flood into the space and start lifting all the boats,\u2019 Preston said. \u2018But the \u2018gimme\u2019 is to just own growing US production and the best advanced projects, because those are what this market specifically needs to fix the problem that it\u2019s facing. So those are three examples. There are others. That\u2019s what I\u2019m doing in uranium.\u2019<\/p>\n<\/div>\n

\n

When to position in gold stocks <\/h3>\n

Gold has stayed relatively stable in recent years, even with interest rates high. Its performance has been partially attributed to record central bank gold buying, especially in the east \u2014 China was 2023\u2019s top purchaser at 225 metric tons.<\/p>\n

\u201cGold has done a very impressive job over the last few years, even if that impressive job has made for a very boring price chart. Nobody gets excited about a sideways chart, (and) we\u2019ve had a sideways chart for quite a few years,\u201d Preston said. <\/p>\n

Gold tends to fare well when interest rates are low and the US dollar is weak, and with central banks widely expected to cut interest rates in 2024, many experts are optimistics about its prospects. <\/p>\n

Preston sees an opportunity on the horizon for investors who are looking to get a foothold in gold stocks, but noted that it\u2019s impossible to exactly time when they will move.<\/p>\n

\u201cOnce there\u2019s news that the (US Federal Reserve\u2019s) rate cut is coming, I think gold will make its way higher. But since we don\u2019t know exactly when that\u2019s going to happen, the more cautious approach, rather than diving across the spectrum into gold stocks right now, is potentially to buy the ones that move first and most when gold makes its move,\u201d she said.<\/p>\n

Preston suggested first looking to producers of gold, or companies that have mines in development that are close to production, followed by explorers. However, investors may not want to establish their entire position right now. <\/p>\n

\u201cIs it next month? Is it six months from now? If we all had unlimited capital, then sure, buy them now that they are super cheap. I\u2019m just being a little bit aware that we don\u2019t all have unlimited capital, so I think it\u2019s just important to be aware that it might not happen tomorrow. I think gold will make a big move this year, but it might take a few months yet before that plays out,\u201d she told the audience at VRIC. <\/p>\n<\/div>\n

\n

Think long term for copper stocks <\/h3>\n

From uranium, which is happening now, to gold, which will happen in the near future, Preston moved to copper.<\/p>\n

The red metal has longer-term prospects, but has faced major headwinds over the last several years. With that backdrop in mind, Preston pointed to conservative management teams, a disinterested market and a challenging permitting environment as being the most impactful to the copper market. <\/p>\n

\u201cThose three factors have pulled together to mean we haven\u2019t been building new copper mines. It\u2019s a really significant thing. We also haven\u2019t been finding big, new copper deposits or pushing them towards development,\u201d she noted.<\/p>\n

As excess copper supply works its way through the system and as demand picks up, new projects will be necessary. However, Preston said that out of the 40 top copper development assets, 31 are far from guaranteed. Of those, there are 23 that could produce within 10 years, with nine being blocked and another five facing permitting risks. \u201cThat\u2019s just a capture of the amount of challenge there is bringing that copper supply online,\u201d she said. <\/p>\n

She sees great potential for copper, but said it\u2019s still a ways off, which means it requires a longer timeline. \u201cWe\u2019re not there yet. It\u2019s going to be a great market when it happens, but I don\u2019t know when that\u2019s going to be,\u201d Preston said. <\/p>\n<\/div>\n

\n

Discovery plays \u2014 the exception to the rule <\/h3>\n

While fundamentals and timing are key to building a portfolio of stocks in the resource sector, Preston also said there are exceptions to the rule, especially when it comes to the discovery phase.<\/p>\n

\u201cIf you are someone who plays the exploration side of the game, throw everything I just said out the window,\u2019 she said. \u2018You can buy the stock (based on) what you think the investment thesis is for that stock.\u2019 <\/p>\n

Preston added that investors should constantly be re-evaluating this thesis, and emphasized that for her, discovery and pre-discovery stocks are the hardest to pick.<\/p>\n

\u201cIt\u2019s easy to look at a map that has beautiful colors and looks like it has a bull\u2019s eye, but there\u2019s obviously a lot more than that,\u2019 she said. \u2018So own quite a few, don\u2019t put all your eggs in one basket \u2014 the actual success rate is not what we wish it was, (though) not through the fault of the explorers. That\u2019s just the nature of trying to find things that you cannot see.\u2019<\/p>\n

Investors can seek to minimize risk by financing through warrants, and being aware of low trading volumes. Preston also encouraged investors to take some profits as they happen. <\/p>\n

\u201cIt\u2019s rare to regret selling in the markets these days. Then just manage your portfolio, and know why you own each stock. If news changes that reason, make sure you either come up with a new reason or exit your position,\u201d she finished.<\/p>\n<\/div>\n

\n

Investor takeaway <\/h3>\n

Entering the commodities sector can provide investors with great opportunities, but it\u2019s important to have clear reasons for investing in a particular company. Investors who understand the market dynamics of the metal they\u2019re looking at and have a realistic investment timeline may have an advantage.<\/p>\n

As Preston said in her closing words, it\u2019s key to be aware of the risks involved, and not to be afraid to exit an investment if new circumstances change your opinion on the stock. <\/p>\n<\/div>\n

Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.<\/strong><\/p>\n<\/p>\n

This post appeared first on investingnews.com<\/div>\n","protected":false},"excerpt":{"rendered":"

Building a successful portfolio of mining companies can be challenging. It requires a delicate mix of knowledge, timing and patience, as well as an understanding of commodities prices. At this year\u2019s Vancouver Resource Investment Conference (VRIC), Resource Maven Gwen Preston used examples from the uranium, gold and copper sectors to outline different strategies to use […]<\/p>\n","protected":false},"author":0,"featured_media":1093,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1092","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/1092","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=1092"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/1092\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/1093"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=1092"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=1092"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=1092"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}