CHAPTER 17

Commodity Equities and Producers

Investing through companies

Opening question

“Gold went up 10% last year. Why did my gold-mining shares fall?”

In this chapter

Why a producer's share is not the same as the commodity it produces
Operating leverage: how fixed costs make profits move faster than prices, with a worked example on a gold miner
Two exposures in one share: the stock-market beta and the commodity beta
Upstream, midstream and downstream companies, and why processors are spread businesses
Royalty and streaming companies and their lower cost risk
Hedging, debt, mine quality and country risk
Gold miners in the NXW Gold Plus index
Listed producers and processors in Vietnam

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This chapter is in the full book

Chapter 1 is free to read online. The full text of chapter 17 — with its tables, figures, worked examples and practice lab — is available in the complete edition of Commodity Investing: From Theory to Practice (Volume 2, NXW Investment Library).

Read Chapter 1 free Get the full book — [email protected]

Sections of this chapter

17.1 A share is not a barrel

17.2 Operating leverage: profits move faster than prices

17.3 Two exposures in one share

17.4 Upstream, midstream and downstream

17.5 Royalty and streaming companies

17.6 Hedging and debt: what the balance sheet does to exposure

17.7 Management, costs and politics

17.8 Gold miners in the NXW Gold Plus index

17.9 Producers in Vietnam

17.10 When to choose producers

← Chapter 16: Commodity Funds, ETFs and ETCs Chapter 18: Physical Assets: Bars, Storage and Farmland →