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Precious metals and mining companies tend to be less intergated than say energy companies. For example Mobil explores, extracts, refines, produces, and retails products from the oil, NG, and other energy resources it handles. I can't name many PM company that chose to integrate. As a result, these metal mining companies are exploited in ways that often hurt there business value.
Glencore and Xstrata are attempting to integrate mining and trading:
Industrial companies that depend on these metal mining resources are more profitable when these mining resources are cheap, but that profit margin eventual is harmed as these resources become scarce through high demand or limited production.
The auto industry for example needs palladium and palladium metal (PALL) has performed well, but look at the mining company that mines Palladium (PAL) since 2011...wow now that's a chart!
Something has got to give.
The skeptical side of my brain: I think these struggling mining resource companies can be easy targets by deep pockets investors who might chose to orchestrate shortages and the commodity cycle starts again.
Comments
Glencore and Xstrata are attempting to integrate mining and trading:
Vertical Integration
And Siemens,
siemens-metals-mining/
Interestingly this optimistic Report was written just before the shoe dropped in (2011), Mining Industry and Trends:
the-game-has-changed
Industrial companies that depend on these metal mining resources are more profitable when these mining resources are cheap, but that profit margin eventual is harmed as these resources become scarce through high demand or limited production.
The auto industry for example needs palladium and palladium metal (PALL) has performed well, but look at the mining company that mines Palladium (PAL) since 2011...wow now that's a chart!
Something has got to give.
The skeptical side of my brain:
I think these struggling mining resource companies can be easy targets by deep pockets investors who might chose to orchestrate shortages and the commodity cycle starts again.