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If there was a stock market discount bin, it would be overflowing right now with mining stocks of all shapes and market caps.
The TSX materials sector is down more than 30% so far this year, with gold miners being particularly clobbered, having lost 38% of their value since January. It’s been the worst year for global mining stocks since the financial crisis.
The last bastion of safety for mining investors — potash stocks — collapsed this week to join their digging and drilling brethren in the basement. The break-up of a Belarusian-Russian cartel that was responsible for 43% of global potash exports is to blame. Its demise led to a potash price collapse, resulting in a sharp pullback for fertilizer stocks such as Potash Corp. of Saskatchewan Inc., Mosaic Co. and Agrium Inc.
The bad news didn’t stop there. A day later, Barrick Gold Corp. revealed the second-worst loss in Canadian corporate history. The miner announced it lost US$8.56-billion in the second quarter, after a massive US$9.3-billion writedown at its Pascua-Lama development in Chile.
All of that ensures Canadian mining stocks are well on their way to posting a third-straight annual decline. It’s no wonder many fund managers, despite seeing a lot of value in the sector, are proceeding cautiously.