The mining sector is one which has been a terrible investment historically, trading at levels seen 13 years ago, near the inception of the S&P/TSX Capped Materials Index (TSX:TTMT), an index which closely tracks Canada's mining sector. Any time one suggest an investment in a sector which hasn't seen gains in over a decade (through a massive bull market nonetheless), one has to wonder about the future potential of such an investment.
I tend to stand on the side of history, so venturing into the mining space is an exercise in attempting to understand the future, and just where we are on this current macroeconomic cycle.
Canadian mining companies encompass a broad range of materials, from precious metals to industrial metals, fertilizer, and so on. I believe significant opportunities exist within the mining sector that investors ought to be aware of, particularly in commodities which are harder to mine and which Canadian companies have excelled at extracting (profitably) for years.
Two key segments I would encourage readers to focus on are: rare earth metals, and potash. Supply and demand fundamentals are on the side of the investor in both of these segments (one is key to technological production, and the other to the global food supply).
Finding companies with good balance sheets, and a history of profitable extraction is the key here, and I will be digging into a few in the coming months to provide more insight into Canadian companies that really stand out.
Invest wisely, my friends.
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