Mining stocks are the quintessential macro-driven or “cyclical” investment. When the global economy is running
white hot, demand for key resources soars. And so do the earnings and share prices of the companies that seek
out an extract everything from iron ore and copper to platinum group metals (PGMs).
Conversely, when there’s a downturn, demand for metals and minerals is one of the first things to plunge. And
the deeper the economic trough, generally the worse the prognosis for miners’ earnings and investment returns.
Here in mid-2020, the global economy is looking down the abyss of the biggest recession in living memory.
Measures taken to curtail the COVID-19 pandemic have slammed the brakes on activity across a wide swath of
Only unprecedented monetary and fiscal stimulus has prevented an accompanying calamity in the financial markets
so far. But with unemployment soaring, demand plummeting for many products and credit markets tightening,
Q2 is shaping up as the worst period for global growth at least since the Great Depression of the 1930s. And
prospects for a recovery in the second half of the year—or even in 2021—are still highly uncertain.
2020 will be the “Year of the Rat” in China. According to Chinese tradition, the rat is a sign of wealth & surplus. We say, why not view this as a good omen for the financial markets, as we are about to enter what’s shaping up as both a promising and very interesting year.
Just a cursory look at global economic data and political developments is enough to understand what’s needed for metals to perform well next year: