Market Commentary

Metals and Mining

The mining index, which includes the largest diversified mining companies, is up 46% over the last year. Copper is up 62%, silver up 51% and platinum is up 32%. Does this mean metals have further to go? It is a question on every investor’s mind?

There are two factors that support higher prices; one is the weakness of the dollar. A weak dollar pushes up prices for all commodities. Also, since most of the world’s debt is dominated by dollars; its weakness helps loosen the monetary conditions in other countries.  The second support is the fear of inflation and the actual appearance of inflation. Because of the fear we may be entering a commodity supercycle that could last decades.

The supercycle theory goes to the cost of infrastructure spending over projects focused on clean energy and the lessening of the carbon footprint around the world.

Investors need to pay attention.