The Resource Stocks that Could Fly Next

The Resource Stocks that Could Fly Next

This morning I’ve been trawling through the Daily Reckoning archives from this year.

I’m sure I suggested somewhere that the big banks would start slashing staff to cut their costs and go digital.

I can’t find it anymore, so maybe I dreamt it, or someone smarter than me said it.

Either way, it’s no consolation to the 6000 people at National Australia Bank going to get the flick over the next three years.

I’m not surprised. The Australian credit market is so competitive right now that nothing and no one will be sacred.

Your bank teller might be friendly, but that person is also a large expense on the books. So it will be adios, and thanks for the memories.

Very few jobs are secure in today’s economy with the rise of automation and artificial intelligence.

I don’t presume to be immune from this, either. I fully expect the crypto market to make most of my knowledge of the stock market redundant over the next ten years.

That’s why I’m researching blockchain, bitcoin and technology whenever I can.

Regardless, for the immediate future, we can expect the other three big banks to do the same as nab.

The conclusion is that Australia’s share market can keep pushing into new highs over time as the banks become more profitable.

That’s if they can hang on to their market share…

The regulators can’t plug all the leaks into Aussie property…

News just in reveals that foreign money will continue to leak into the Aussie property market.

The Australian Financial Review reports that a private lender based in Melbourne is issuing 30-year mortgages to foreign buyers. A foreign lender is backing this company.

It’s not clear if this overseas bank is operating in Australia, or subject to the same rules currently restricting the Aussie banks around their investment loans.

Like I’ve said before, the Aussie economy should keep ticking over as long as the credit keeps flowing. The Reserve Bank stats released this week still show total credit growth expanding at over 5%.

This being Australia, the rate of housing credit going out is higher than business loans. It would be nice to see that change.

Perhaps the comeback in mining can help us out here.

Things are looking good in this sector. Australia’s mining exports mean we’ve actually been running a trade surplus recently. Most of that is thanks to iron ore.

But maybe one day copper might play a big role for Australia here too. BHP is certainly expecting big things from the metal.

Apparently the Big Australian sees copper demand going up by at least 12 million tonnes until 2035. That’s mainly thanks to electric cars and renewable energy.

An electric car uses four times as much copper as a conventional one ­– as it stands today, anyway.

This outlook for copper looks about right to me…

These stocks could take off anytime

The spending on exploration has been so low in recent years that it’s going to take the resource industry years to catch up. And existing reserves are being run down every single day.

Copper is already up 50% this year.

I’ve been keeping track of BHP’s copper moves too. They’re at least putting their money where their mouth is.

For example, BHP is going to spend $2.46 billion upgrading its Spence copper mine in Chile. That’s a lot of cash in anyone’s language. It could extend the life of the mine by 50 years, according to The Australian Mining Review.

And that’s not all…

This year BHP also announced a $600 million upgrade and expansion to its copper mine at Olympic Dam in South Australia.

It’s also appears it’s actively looking out for more mines or leases to acquire.

So keep an eye out for any promising junior copper stocks.

The scene is set for them to really fly should they announce a significant discovery or potential takeover.

That’s true of all the ‘battery’ related metals like lithium, cobalt and graphite.

In fact, it’s hard to think of any commodity that has a massive known abundance of supply, perhaps with the exception of iron ore.

It certainly means more mining investment and exploration is going to be required.

That’s good news for Australia for the foreseeable future. And more jobs in mining.

However, driving a truck is not likely to be one of those for much longer. Australia’s richest person, Gina Rinehart, has an iron ore operation at a mine called Roy Hill.

They’re going to roll out driverless trucks there in the second half of next year.

Like I said at the top.

Very few jobs are secure in today’s economy. It doesn’t mean you have to be afraid, but you do need to stay ahead of the trends driving the economy.

I suggest you do that here


Callum Newman Signature

Callum Newman
Editor, The Daily Reckoning Australia