Freeport-McMoRan Copper & Gold Inc. (FCX), Goldcorp Inc. (GG): The Worst Sector for Investors in the First Half of 2013

Company specific issues were the main culprit behind the really rough first half endured by investors in iron ore and metallurgical coal miner Cliffs Natural Resources Inc (NYSE:CLF) . The company was down a sickening 58% in the first half after slashing its dividend by 76% and raising equity capital to shore up its balance sheet amid slumping profits. A big factor here is that the company was also forced to write down about a billion dollars of goodwill related to its Consolidated Thompson acquisition. Unfortunately, the company has a long road to recovery ahead of it.

Given the precipitous fall in gold prices, gold miners also have a long road to recovery. Many, including Goldcorp Inc. (NYSE:GG), have based business decisions on a long-term price of gold north of $1,350 an ounce, which could mean project delays or more write offs. That’s causing many miners to look at cutting costs with companies like Yamana working hard to lower overhead costs as well as cut higher-cost production. Unfortunately, until the price of gold finds a firm bottom, investors in these companies could be in for a bumpy ride.

The bottom line for investors is that you should continue to expect volatility until a bottom is found in many of these commodities. That doesn’t mean that you can’t do well by getting in early, if you have a very long-term time horizon. At some point all of these commodities will be back in favor with investors because supply and demand always seems to ebb and flow.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX).

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