This week I launched a subscription service on the Seeking Alpha Marketplace called Industrial Minefinder. This service will focus on providing do-it-yourself individual and professional investors with what I think are exceptional investment opportunities from within the industrial mining sector. It will essentially cover any type of mining company except for primary gold miners. Coverage will roam across the market capitalization spectrum — juniors, intermediates, and majors — but will tend to focus more on the juniors and intermediates as this is where the potential for truly outsized returns lies.
Why did I launch Industrial Minefinder?
God began leading me to the industrial mining sector several years ago. My own research has reaffirmed that this sector holds significant potential for the years ahead. I have since committed a lot of resources to making this a key area of focus within True Vine Investments. I decided to launch Industrial Minefinder to build upon this effort and extend my reach to do-it-yourself and professional investors.
The timing could not have been better as an important index of industrial miners, the MSCI ACWI Select Metals & Mining Producers Excluding Gold and Silver IMI Index recently broke out of a 10-year downtrend. This index is tracked by the iShares MSCI Global Metals & Mining Producers ETF (Symbol: PICK). The long-term oriented monthly chart of PICK reveals this breakout:
Key Megatrends Driving Metals Demand
There are four megatrends that have begun that are set to drive industrial metal demand for . These include the following:
1. Chinese Reserve Depletion
Most readers are aware that the Chinese have consumed an inordinate amount of metals over the last two decades to spring their economy forth, however, what is missed by many is the fact that they have also been significant producers of most metals. Chinese miners have used up a lot of the low hanging fruit and the production of some metals is now set to decline. The following chart shows how this may already be quietly impacting the prices of industrial metals:
If China is going to continue their industrial ambitions, the price of many industrial metals may have to keep rising to spur the necessary level of investment in new mine production.
More specifically, consider that China is by far the largest producer of zinc in the world. A substantial decline in Chinese production would have significant ramifications for the price of zinc. The following chart reveals how Chinese mine production of zinc has been declining for over three years now:
2. Indian Economic Growth
The population sizes of China and India are presently similar, however, because of India's superior demographics, its population is projected to continue growing. Not only is India a large economy with a high growth rate, but it is a large economy with a growing population and a higher growth rate. India's GDP per capita (or total economic output divided by population) is about 10 to 15 years behind China. Given current growth trends, we are going to see another economy the size of China's emerge over the next decade. Moreover, similar to China over the last two decades, India's urban population is projected to increase by more than 10 million people per year. This will have a significant impact on certain metals like copper.
3. Electric Vehicles
As recently as a few months ago, I was skeptical about electric vehicles. However, after China announced plans to eventually end the sales of petroleum powered vehicles I quickly changed my tune. On top of this, India is taking a similar path. Bloomberg Gadfly columnist, David Fickling, noted that India will be the 3rd largest car market in the world by 2020 and "Prime Minister Narendra Modi's think-tank Niti Aayog aims to get electric vehicles to 44% of the fleet by 2030, ad is aggressively favoring them with tax rates 31 percentage points below those on hybrids and internal-combustion-engine cars ... ."
Half the world's population moving to electric vehicles is a trend I want to get in front of. While many investors will rush to buy shares of the hottest car company, the real money to be made is in the materials. The barriers to entry for quality mines are high and it typically takes years to bring them online. Now is the time to prepare because the projects juniors are exploring and developing today will be the ones producing the needed metals decades from now.
4. Global Infrastructure Development
China's new Belt and Road initiative is already leading to a substantial increase in infrastructure development activity around the world. Chinese development banks and funds are committing $10s of billions of dollars to financing projects across Africa, Asia, and Europe.
To be sure, I have little expectation that political aspirations for rebuilding and enhancing U.S. infrastructure will take root anytime soon. Anything that comes of that will be icing on the cake.
The Benefits of a Subscription
I am really excited about the opportunities within the industrial metals sector. I think subscribers to the Industrial Minefinder will benefit from navigating this sector with an experienced professional.
Subscribers will receive frequent posts covering the following:
- In-depth coverage of actionable investment opportunities relevant for both shorter-term traders and longer-term buy and hold investors.
- Ongoing updates which will include a frequently updated list of near-term catalysts impacting junior miners featured in Industrial Minefinder.
- Analysis of the supply and demand fundamentals impacting the price of certain metals. This research is a prelude to selecting the right companies.
- Educational pieces detailing some of my methods for analyzing companies so that readers will have a complete understanding of what I am referring to.
- Chat forum with the Industrial Minefinder community and email access to me.
If you are a do-it-yourself or professional investor I encourage you to consider subscribing. All subscribers who choose an annual subscription will receive a 20% discount and the first 20 subscribers will lock-in the introductory rate for the life of their subscription. You can cancel at anytime if you are not satisfied. Click HERE to subscribe to the Industrial Minefinder.
Comments or questions? Leave them below and I will respond.
Joshua Hall, ChFC
The True Vine Letter is a publication of True Vine Investments, the investment advisory business of Joshua S. Hall, ChFC, and a Registered Investment Advisor in the U.S.A. The information presented is for educational purposes only and should not be regarded as specific financial or investment advice nor a recommendation to buy or sell securities or other investments. It does not have regard to the investment objectives, financial situation, and the particular needs of any person who may read this Letter. True Vine Investments will not be held responsible for the independent financial or investment actions taken by readers. All data presented by the author is regarded as factual, however, its accuracy is not guaranteed. Investors are encouraged to conduct their own comprehensive evaluation of financial strategies or specific investments and consult a professional before making any decisions.
The True Vine Letter often provides analysis on specific companies. True Vine Investments does not receive compensation for this analysis. Various companies are reviewed to highlight aspects of the decision making process used by the Advisor in selecting securities for various portfolio strategies. These reviews are for educational purposes only and not a recommendation to buy or sell securities or other investments. In no way should they be construed as investment advice. The companies reviewed are often junior miners which are often illiquid, highly volatile, and extremely risky. They should only be held as part of a broader portfolio managed by a professional or other experienced and sophisticated investor. The clients of True Vine Investments always come first. The Advisor reserves the right to buy or sell any security at any time, often for reasons not related to analysis provided in the Letter, to properly manage their portfolios.
Positive comments made regarding this article should not be construed by readers to be an endorsement of Joshua Hall’s abilities to act as an investment advisor.