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July 9, 2015

The Power of the Patient Investor #Gold #MiningStocks #Uranium

Value investing has been out of favor in recent years, but patient long-term investors can still find bargains in unloved sectors of the market.

From Institutional Investor, the author likes these resource plays:

Another opportunity afforded the patient investor exists in
the gold mining industry. Conjuring incremental money takes no
time at all, if by money we are referring to fiat currencies.
Digital trillions require merely a key stroke; patience has
been neither required nor exhibited. Conversely, producing an
incremental gold coin requires rigorous effort, a lot of
capital investment and the patience of a saint. New gold mines
generally take more than a decade to find, drill, assess,
permit, finance (and divvy the economics among owners,
government and other stakeholders), build and begin to operate.
There is a reason only a few major mines have been constructed
over the past 30 years.

Entering the gold mining business is arguably crazy. Yet a
patient investor need not be exposed to the anguish and
expense. Here, too, the valuable product of successful
exploration — years of toil, fruitful negotiation and
massive capital investment — is periodically wholesaled on
Wall Street for cents on the dollar. Names that we like in this
space are many: Barrick Gold Corp., Centerra Gold, Dundee
Precious Metals, Gabriel Resources, Goldcorp, Kinross Gold
Corp., Kirkland Lake Gold, Lundin Gold, Newcrest Mining,
Northern Dynasty Minerals, NovaGold Resources and Turquoise
Hill Resources.

Uranium is next on our list of valuable yet unloved
commodities that can result in investing opportunity. Like
hydro, uranium is used to produce electricity at an extremely
low variable cost and without air pollution or greenhouse
gases. Unfortunately (fortunately, for investors?), uranium is
relatively scarce and getting more scarce. Consumption has been
exceeding mine supply for the past 20 years. According to
energy expert Marin Katusa, the annual deficit could be 55
million pounds by 2020. New mines take many years to develop
and generally would require much higher uranium prices to
justify the investment. How odd, yet fortuitous, that
Canada’s Cameco Corp., owner of the world’s best
uranium mines, has had its shares smacked by the market,
bouncing along at the lowest price levels seen since 2004.

See the whole article on the Institutional Investor site here:  The Power of the Patient Investor:

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