In today’s Fat Tail Daily, James Cooper explains why investors should be following INSIDERS in the mining industry. The biggest players have access to information the rest of us wish we had…Their daily business involves mining, exploration, contracts and high-level talks…that places them in a strong position to understand the future trajectory of markets. It’s why the everyday investor should be paying close attention. Read on to find out how you can you use this knowledge to your advantage
When we talk about watching insiders, I mean the BIG players in industry.
That is, the directors of multi-billion-dollar companies, mining magnates and executives from investment banks tied up in mega-deals that shake the industry.
It seems simple, follow an insider and invest accordingly…
So why don’t more people do it?
Well, small time investors want instant returns, especially in the mining sector.
They’re also quick to pull the sell trigger when stock prices decline.
But week-to-week share price volatility matters little to big time investors.
In fact, MAJORS often get market timing wrong (over the medium term).
But that matters little…the big wigs position for long-term growth…the mega trends.
Think about it, long-term growth opportunities in commodities are obvious when you put short-term volatility to the side…
Limited supply thanks to a lack of new discovery and broken supply chains.
This is happening precisely at a time when the world is looking to embark on a once-in-a-century energy transition.
The investment road map is clearly there…crystal clear for investors to follow.
But without knowing exactly WHEN the market will turn, the majors know they must ride-out today’s volatility to capture gains from this commodity mega trend.
That’s what insiders ARE doing and I think you should be following their lead.
Just take Gina Rinehart, Australia’s richest person.
Rinehart heads Hancock Prospecting, a privately owned mineral exploration and extraction company founded by her father, Lang Hancock.
But her role in turning this company into the multi-billion iron ore giant it is today absolutely qualifies Gina as a successful business tycoon in her own right.
In other words, Rinehart is an insider worth watching.
In December 2022, she pumped Arafura Rare Earths [ASX:ARU] with $60 million in capital.
That gave her a 10% stake in the company.
But as an investor that’s looking like a pretty poorly timed deal…
Shares in Arafura have fallen over 50% since Rinehart took her stake.
But I doubt Gina is overly concerned.
Rinehart is positioning for major future upside as rare earths become entangled in trade disputes between China and the west.
As an advanced developer, Arafura is looking to join an exclusive club of rare earth suppliers located OUTSIDE China.
Now, there’s no guarantee China will restrict rare earth trade exports, but my money’s on this multi-billion mining magnate getting this theme right.
Another key investment idea to watch right now is lithium…Gina has invested heavily in Australian lithium companies in the second half of 2023.
Given the hefty price falls, this insider looks to be capturing the steep discounts on offer.
Again, it’s something you should be watching.
Earlier this year, she flouted chemical giant Albemarle’s attempt to acquire Liontown [ASX:LTR] after buying a 20% stake in the Australian developer.
Rinehart is now in a corporate showdown with Chilean lithium giant SQM, and its bid to take ownership of Australia’s Azure Minerals [ASX:AZS].
As retail investors flood out of lithium stocks, Rinehart is buying.
This key element is what separates billionaires from the average punter…
The world’s most powerful investors are intimately aware of long-term growth drivers.
It’s THIS knowledge that gives them the strength to capitalise on market weakness.
You see, insiders are privy to the global dealings between suppliers, buyers, policy makers and the future direction of supply and demand.
They usually have a team of analysts at their disposal and high-level contacts.
The rich get richer by using information, not by luck or an intuitive punt on the stock market.
It is a key reason you should be following their lead.
Now Gina is not the only insider worth paying attention to…
Australia’s second richest person, Andrew ‘Twiggy’ Forest is another successful business tycoon who amassed a fortune by pivoting to iron ore in the early days of the China-led infrastructure boom.
But here, we have another iron ore billionaire shifting into critical metals.
He’s family-owned business, Wyloo Metals, has steadily acquired projects across Australia and overseas as it looks to become a multi-commodity powerhouse tied to the critical metal theme.
Earlier this year, Wyloo completed the acquisition of Australia’s Mincor Resources, a nickel sulfide producer based in Kambalda, Western Australia.
Wyloo also picked up one of the largest undeveloped, high-grade nickel-copper-platinum-palladium deposits in the world…
Known as ‘Eagles Nest’ it is located on the fertile grounds of northern Ontario, Canada…a region aptly called The Ring of Fire by geologists thanks to its rich endowment of minerals.
But it’s the world’s largest miner, BHP, that you should be watching most carefully…
You see, this company delivers more contracts, acquisitions, mining, exploration than any other entity in the world.
It’s a major stakeholder at high-level meetings between suppliers, policy makers and buyers.
Not just in Australia, but in every major mining hub across the world.
It’s why investors should be paying close attention.
Follow BHP’s multi-billion-dollar money trail and it is clear what this mining giant is doing…
Completion of a $9.4 billion takeover of South Australia’s Oz Minerals earlier this year…followed by a $4.5 billion expansion of the world’s largest copper mine in Chile, Escondida.
In addition, it’s flagged more than $10 billion worth of investments into new copper projects in Chile.
It is also throwing an army of rigs and support crew at South Australia’s Oak Dam copper development, near Olympic Dam.
Watch the insiders and follow their lead…Right now, the biggest breadcrumbs lead to critical metals.
Until next week,
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James Cooper,
Editor, Fat Tail Daily
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