For anyone wanting to buy and hold, and with a two-to-three year view of the market, the starting point for portfolio rebuilding remains BHP Billiton and Rio Tinto. Between them, they cover all of the resources sector.
After that, a solid exposure to gold is valid for 2009, starting with Newcrest, and adding a small, high-quality producer, such as Avoca or the re-emerging Kingsgate.
In nickel, you can’t got past Mincor and Western Areas simply because they have what all miners crave, high-grade ore bodies.
The best in copper is Equinox as it cranks up production at its world-class Lumwana mine in Zambia. Atlas remains a solid player at the small end of the iron ore market despite internal management instability and Kagara should shake off its troubles in the zinc and copper sectors.
The key to picking winners for 2009 is a combination of four factors. They are: cash in the bank (which equals survival in what will be a tough year), a low-cost mine and/or a low-cost development option (which introduces takeover potential), quality management, and minimal debt.
A fifth factor is time. There is no rush. Earlybird speculators prepared to trade regularly might do well, but serious long-term investors will take their time reading the signals and picking stocks for the sustained rally which is not expected to arrive until the second half of 2009, at the earliest.
