You
may need some time to fit in. By
fitting in I don’t mean adjusting to do what everybody else does. You know
my atttitude about that sort of thing. I rather mean finding your niche
in more than one respect. Hernan Cortes must have gone through this experience
as well when he arrived in the New World. When Hernan Cortes arrived
in the West Indies and learned that he would get real estate if he committed
himself to stay for five years, he responded: “Neither in this island nor
in any other of this new world do I wish or mean to stay for so long”.
However, years later on he became governor of New Spain, as Mexico was
then called. As Rebecca West notes in her book “Survivors in Mexico”:
“It was the kind of remark that sometimes leads to a marriage”.
Please don’t get me wrong. My humble self isn’t saying that I’m
going to get married.
The
last thing on earth I need at the moment is a sheila (New Zealand and Australian
slang for woman) in my life. All I’m saying is that the first impression
isn’t always right. And it makes sense to do a little more than just scratching
the surface.
Investment Themes
It’s gradually emerging now that
the next big investment theme is going to be commodities. Comparatively
sophisticated observers have realised the upcoming wind of change a while
ago already. A pot of money may be made not only in metals, but also in
energy and agriculture/food. Energy and agriculture may offer opportunities
to get a foot in the door in Latin America. My humble self has been rambling
about it for a while already.
However, I tend to be a contrarian
by nature. To illustrate it with a simple example, a while ago Sam’s Club
opened its doors in Colima. While half of Colima was staggering around
there, I went to La Marina and Sears. Because Sam’s Club was entering the
market in Colima, La Marina and Sears offered a bunch of discounts. While
Sam’s Club was jam packed, I carefully picked a few bargains at La Marina
and Sears. At that time, La Marina and Sears were peaceful and quiet, the
perfect time to do some shopping.
Not
following crowds appears to be the key to successful investing as well.
The right time to buy an investment is – you never guess – when nobody
wants to have it. Because my favourite reading material includes publications
of a few carefully selected contrarian investment advisors, I’m getting
increasingly interested in an investment theme that not a heap of folks
are sussing out, namely junior mining companies. Junior mining companies
are primarily exploration companies, which search for new gold and silver
deposits.
Because they may end up finding next
to nothing, this sort of investment seems to entail a little risk. Even
if a junior mining company manages to discover new deposits, it may not
have deep enough pockets to go into production.
Moreover, you can’t rule out dealing
with an outfit that may turn out to be a little dodgy. Bre – X Minerals
and its operation in Borneo may ring a bell.
As far as yours truly has been able
to get a grip on the matter, investing in junior mining companies boils
down to two issues. First, is there going to be a mine? Second, is the
mine going to generate profits? As far as the future of a junior mining
company is concerned, there are only three scenarios possible.
The
company develops the mine. Another company buys the junior mining companies.
Or the company joins the ranks of the departed. Even though all this may
sound comparatively easy, investing in junior mining companies involves
a great deal of risk. Chances are very slim that a junior mining company
will ever develop a mine. What do you reckon how cheap it is for these
outfits to get a loan? Because of all the risk and uncertainties involved
it may be a wise idea to invest in junior mining companies through an investment
fund. Or use a seasoned advisory service instead.
Africa must be something like a stronghold
for mining operation. In particular South Africa and Ghana appear to offer
environments that encourage exploring and producing minerals. However,
it’s worth keeping an eye on Latin America as well. Chile and Peru may
deserve to be called success stories in terms of implementing mining sector
reforms.
But countries like Bolivia and Mexico
manage to increase their share in mining investment as well. It goes without
saying that smoothly functioning capital markets are instrumental in financing
exploration and mining projects. Take the stock exchanges in Toronto and
Vancouver as examples, and you see what I’m rambling about. Developing
capital markets has made some progress in Latin America. But there’s still
a long way to go. Let’s wait and see how things are going to unfold.
The following
is a list of articles written by Jurgen for the magazine:
You
may need some time to fit in. By
fitting in I don’t mean adjusting to do what everybody else does. You know
my atttitude about that sort of thing. I rather mean finding your niche
in more than one respect. Hernan Cortes must have gone through this experience
as well when he arrived in the New World. When Hernan Cortes arrived
in the West Indies and learned that he would get real estate if he committed
himself to stay for five years, he responded: “Neither in this island nor
in any other of this new world do I wish or mean to stay for so long”.
However, years later on he became governor of New Spain, as Mexico was
then called. As Rebecca West notes in her book “Survivors in Mexico”:
“It was the kind of remark that sometimes leads to a marriage”.
Please don’t get me wrong. My humble self isn’t saying that I’m
going to get married.
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