Glencore-Xstrata: The Real Issue

Machinery operates in a pit at Rio Tinto Group's West Angelas iron ore mine in Pilbara, Australia

The $35.1 billion Glencore-Xstrata merger saga continues to rumble on, with the Xstrata board delaying its response to the proposed takeover by another week to resolve management and board issues at the new company. All the political and personal intrigue in this deal is masking the much bigger issue, namely the imminent sell-off of the mining sector. Some investors seem to be worried about whether their holding should be in Glencore or Xstrata stock. My view is: Short them both.

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