iShares S&P/TSX Gb Base Metals (XBM.TO)

The run on this started a bit sooner than everything else. If it gets through the top of $14.20, it will run. The chart shows a huge head and shoulders formation. Some of the bigger components are things like Lundin Mining (LUN-T), Teck Resources, BHP Billiton, etc. It will be very volatile, so if you get some profit, then maybe piece off some of it. Come the spring, you are probably not going to want to own this.

Base metals have a very, very strong seasonality. Historically it has been from January right through until June of each year. This year, it has been coming under pressure, but has been going higher during the last 3 weeks or so, which would coincide with the end of the period of seasonal strength for base metals. If you own this, it might be a good time to take some money off the table.

A basket of all the base metal stocks out there. They have a pretty long downtrend that starts in 2011, and it is just starting to poke its head above a shorter-term break. There are no guarantees, but if we are going to get this pro-growth move, base metals are going to be part of that. Thinks this is a double and a low risk by going to the basket.

He tracks this one very closely. It is basically dominated by 3 big names, BHP, Rio and Freeport McMoran. This is expensive. Before the cycle is over, you probably will get a lift in base metals. Because this ETF basically has 3 stocks, you may want to start by picking away at 1 or 3 of these, rather than using an ETF.

An ETF that he is just starting to pick away at, and is in his more speculative accounts. It is focused on the base metals, coppers, zincs, nickels, etc., and is dominated by BHP in Australia and Rio, and some of the famous names. If you share his optimism on where you think global economic growth may be over the next 18 months, base metal stocks may have a pretty good run. If you are going to buy this one, buy it in sort of 3 tranches and try to buy it on down days.

(A Top Pick July 22/14. Down 44.7%.) This just didn’t work, so he sold in March 2015 at around $12.

(Top Pick Aug 13’13, Up 30.90%) He still has mixed feelings about base metals. It is all based on China. He will continue to hold, but would not be a buyer here.

Any time he has the opportunity in his portfolios to buy international or US indexes in the Canadian market, he does it. This does not have gold in it, but is straight base metals. Nobody has put any new money into mining, and there is not a lot of capacity there. Feels that once this gets going, you are going to see a lot of action in the mining sector. It will always be the big cap guys that lead the sectors back, and that is why he has started with this one.

(A Top Pick Jan 16/13. Down 3.59%.) He does like the base metal side. This one has all the big guys in it. With acceleration in housing starts in the US, there will be a good demand for base metals and this should benefit.

This is the time to get into these badly beaten companies. In the big picture situation, Europe is China’s biggest export partner. Europe is coming around, which will help China, which now looks back on our resource sector. We are starting to see these resource companies pick themselves up.

(A top pick Jan 16/13. Down 16.4%.) He’s been wrong so far but he is a big fan of base metals. This index is dominated by the Australians.

This complements iShares S&P TSX Global Gold (XGD-T), which he owns for his more aggressive accounts. Likes the mining business globally. The thing he likes most about this is it is dominated by fantastic global big companies.

Switch from iShares S&P/TSX Global Mining ETF (CMW-T) to iShares S&P TSX Global Mining ETF (XBM-T). Dividend is 1% higher and MER is lower but XBM is less liquid. The choice here is whether you would rather be a base metal player or a precious metal player. (I can’t see that one is a precious metals: Bill.) Nothing wrong with the strategy.