Mining Towns

Great way to lose money.

I’m not interested in buying any property at any price….

The mining sector as a whole is being hit pretty hard right now. I have been doing ok in mining/resource towns for around 10yrs, and will continue to invest in them at certain points but be very very careful. Unless you have real knowledge about what is being mined and why it will do better than the rest in the next few yrs you are just asking for pain. I would say more pain for iron ore and coal in the short term, so no point buying into those markets. Lithium perhaps? Timing is everything for those markets and getting that wrong can mean heavy losses. I am also of the view that property is only worth a bet on a solid trend with a mine, if you want faster buy and sell trading stocks are a better fit to make a quick buck. I recently bought a few stock in a gold miner that was finding high grade ore, they found some more and prices jumped 50% in 2 days, but with the current down trend over the last month I still haven’t made any money!!! Research and education is the key.

A summary point for me would be its ok to have some exposure to mining town properties but this should be a small percentage of your total portfolio and you should know what you are holding and why.

As someone who works in the mining industry I can tell you that there are more smaller companies going under as well as large scale lay-offs than you hear about in the media so be very wary about buying in a mining town. The industry will return to good times again but who knows how long it will take. As Buyers Agent wrote, timing is important.

cheers
Pete