My 22 (yes 22 - not 2) bobs worth - from experience, extensive reading, and discussions with wiser men than me.
A simple exercise: Have a look at the Kitco base metals website. LME Nickel stocks are now at 5 year highs. Nickel price has retreated around 50% from all time highs. Supply-Demand. Basic stuff. = -ve for Ni stocks. Cost of development/production in Oz has skyrocketed. China exports high % of manufactured goods to the USA. USA heading into very troubled waters economically = less demand. So China's demand is reducing. In fact ALL BASE METALS ARE HEADING SOUTH, some faster than others. If a Company is not already a proven producer, then they are a high risk stock as the cost of mine development has become prohibitive in Oz (look what's happened in RSA)and financiers are being very cautious now, and will continue to be so for another 2-3 years as the American credit crisis shows its true colours - very dark ones.
Thanks to globalisation, few developed Countries will escape some pain from Big Brothers excesses.
If you weren't around for the '87 crash then you are about to embark on a steep and expensive learning curve. And '87 was really a post WWII correction to the longest bull market in history.
My only investments on the resources front now are: Gold producers(and a few explorers)with high grade resources(probable and or proven)from underground mining of quartz reefs. Less labour costs and less tonnage thoughput that is all high grade = less environmental flack.e.g. GDR. Also with minimal or no hedging of future production.
Uranium explorers in the NT where mining is allowed.Don't bet on the WA Govt changing its stance. I like CUY.
Add the few Companies into geothermal(hot rock technology) e.g. GDY and other alternative energy sources and that's it.
Iron ore - the big boomer = the biggest faller in the next 12-18 months. China is already curtailing some of the many proposed iron ore smelters as pollution is literally killing them.
China and India are going full on with nuclear power stations. They have no other choice. Neither do we in Oz but our Govts have always been followers, not leaders, globally.
Gold is going to head to dizzy hights over the next 12 months. A price around USD$2300 is only equal to the USD$850 peak of 1980 when adjusted for inflation. So it still has a lot of catching up to do. We are currently seeing a short period of weakness as the US Govt(did I say Govt? - can't even manage their own back yard and if their debt was on a credit card they'd be bankrupt!)tries to prop up the financial sector. They might need another war - boring. Oh well, sorry Iran, but the world is not an even playing field. The Bully Bush Gang still thinks their way is the only way. "God save America" says bushy all the bloomin time. He should be saying "God save America! - please!"
So while Bush fiddles, buy into gold on the current weakness. Could go as low as USD$735 but probably not; +/-UAD$770 is time to buy.
Finally, for the first time since 1971, when there was still a "Gold-exchange" standard price of USD$35/oz, set just after WWII by the then new IMF, we are seeing gold gradually emerge again as the alternative global currency; a true safe haven, unlike the USD$ which is only a piece of paper - one that is no longer trusted to keep its value, nor is it capable of doing so. Only this time it won't be tied to just the USD. America will fight this; but ultimately the weight of their debt to the world will be their downfall. Like all great empires, they too will fall as the result of greed and living beyond their means. The good news is: greenhouse gas emissions will fall substantially for the rest of this century as capitalism in its current state crumbles.
Generation Z are the newborns. The clever, not the $$ rich, will survive. And they will produce generation AA - a new beginning.
(20min delay)