The time could now be ripe for commodity stocks

At the beginning of December, the Bloomberg Commodity Index reached a new low compared to the S&P (since 2010). Commodities have never been so cheaply valued compared to general equities since the last bull market. And in December, the MSCI World Metal and Mining Index was also at its lowest level since 2010. Then commodity and mining stocks started to outperform general equities. This could be the turning point. This increases the chances of an absolute performance of the mining sector and of favorable entry opportunities. Mind you, these are probabilities, but there are several factors that put mining stocks and commodity investments in a favorable light. Firstly, the uncertainties have probably never been as great as they are today, with the forthcoming economic policy in the USA raising many questions. Stronger growth, higher inflation and a growing government deficit are all possible. Overall, the economic outlook has improved. However, economic stimulus is still needed, for example in China. On the other hand, trade disputes and tariffs could represent a headwind for economic development.

The increasing move away from the US dollar could also indicate the end of the US dollar’s strength. Rising demand growth or potential supply chain problems are positive for commodity demand, which in turn should have a positive effect on prices. In contrast to physical gold, mining stocks and commodities are not yet in a bull market.

But according to Craton Capital, indicators and developments suggest that mining stocks and commodities will outperform major equity indices over the next few years. It is therefore time to look at stocks in the copper sector, for example.

Mogotes Metals – https://www.commodity-tv.com/ondemand/companies/profil/mogotes-metals-inc/ -, for example, which is active in Chile and Argentina, has copper in the ground. The Filo Sur copper project in the Vicuña district (Argentina) stands out in particular.

Meridian Mining – https://www.commodity-tv.com/ondemand/companies/profil/meridian-mining-uk-societas/ – has copper, zinc, gold and silver in Brazil. The Cabaçal project has a very good preliminary economic assessment.

Current company information and press releases from Meridian Mining (- https://www.resource-capital.ch/en/companies/meridian-mining-uk-societas/ -) and Mogotes Metals (- https://www.resource-capital.ch/en/companies/mogotes-metals-inc/ -).

In accordance with §34 WpHG I would like to point out that partners, authors and employees may hold shares in the respective companies addressed and thus a possible conflict of interest exists. No guarantee for the translation into English. Only the German version of this news is valid.

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