How I Invest and Trade ASX Mining Shares

January 22, 2024 06:06 PM AEDT | By Team Kalkine Media

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How I Invest and Trade ASX Mining Shares — Image source: shutterstock

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Investing in ASX mining shares can indeed offer lucrative opportunities, but it requires a strategic approach, particularly given the inherent volatility in commodity prices. The mining sector encompasses a diverse range of companies involved in the extraction and production of various resources, including iron ore, lithium, gold, and copper.

Key ASX mining players, such as BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX:RIO), Fortescue Ltd (ASX: FMG), Pilbara Minerals Ltd (ASX:PLS), Northern Star Resources Ltd (ASX: NST), and Newmont Corporation (ASX: NEM), are well-known entities with significant market influence.

Volatility in commodity prices often presents investment opportunities, especially during market downturns. The principle of "buy low, sell high" is paramount in navigating the unpredictable nature of mining shares. Investing when market sentiment is weak and outlooks are uncertain can yield profitable results, as witnessed in the case of Fortescue shares acquired when iron ore prices were below US$100 per tonne.

Diversification within the mining sector allows for exposure to various commodities, each with its unique market dynamics. Copper mining, driven by the decarbonization tailwind, is an area of optimism, with companies like BHP and Rio Tinto gaining attention due to their growing copper exposure.

While iron ore prices remain high, patience is advocated in selecting entry points. Lynas Rare Earths Ltd (ASX:LYC) is deemed interesting due to its share price decline and the continued importance of rare earths in the global economy.

ASX lithium shares present a mixed scenario, with a decline in lithium prices despite anticipated rising demand. Pilbara Minerals stands out due to its current lithium production, expansion plans, and a robust balance sheet.

Navigating volatility requires courage during buying decisions and prudence during selling. The approach focuses on seizing opportunities during downturns while exercising restraint when achieving targeted selling prices.

In essence, embracing volatility as a potential ally, coupled with strategic and patient decision-making, can enhance the prospects of success in investing in ASX mining shares.

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