Metals & Mining

We believe the combination of higher inflationary expectations, a five-year capital starvation cycle witnessed among metals producers, improving global business confidence, healthy levels of infrastructure-driven investment and general beliefs that anticipate more muted cyclical price recoveries should allow metals prices to trend higher. We see risk to the upside for inflation in 2018 and believe this inflation backdrop is favorable for commodities. Our analysis of stock rotation and business and stock market cycles shows that real assets (commodities, real estate) tend to outperform during the latter half of the business cycle. In our interaction with market participants, we have witnessed a touch more optimism around outlook for the entire commodity universe. Miners that exhibit low quartile cost profile while remaining well-capitalized should outperform metal prices and their peers.

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Top Picks:

  • Freeport McMoRan (FCX)
  • Coeur Mining (CDE)

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