Metals & Mining

Metals & Mining We believe metals & mining equities will continue to reflect prospects of early cycle global economic growth, supportive low-to negative global nominal and real interest rates driven by global central bank monetary accommodation, supplies lagging expected demand recovery, emerging higher inflation expectations and investors increasingly emphasizing value relative to growth equity investments. While investor sentiment has improved, producer sentiment should remain relatively muted regarding pricing sustainability and accelerated capital investment as emergence from the global pandemic tempers aggressive activity. Improved free cash generation reflecting margin improvement, supportive and improved financial profiles and a continuation of careful capital allocation should aid valuations. Relative US dollar weakness verses emerging and developed global currencies during 2020 looks to extend into 2021 and provide added investment flows into commodities and the equities. Macro environment suggests support. Nonferrous and precious metals generated strong pricing recoveries from pandemic lows, as gold better reflected extraordinary stimulus emerging from global policy decisions while copper, aluminum, nickel, lead and zinc benefited from enhanced Chinese demand flows, limited supply growth and higher net investment from speculative funds. We remain believers in extended accommodative policies adding to metal demand during 2021 while inventory de-stocking and muted supply growth allow deficits to emerge.  Visible stockpiles remain at relatively low levels (Link to Metals & Mining Outlook).

Top Picks:

  • Newmont (NEM)

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