Is the Fat Lady Still Singing?

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...On the fundamental front, established mining stocks continue to offer sound value, when measured against historical metrics...

...Gold stocks have declined by 31% while the global platinum sector has shed 36%. Higher quality stocks, those producers with established track records, have offered up the best performances, relative to peers and junior stocks.

The recent performance of mining stocks has highlighted the speculative nature of the overall sector, all but confirming the presence of weak speculative holders as significant players behind recent high stock prices. For years as well, brokers and their good friends whipped merger and acquisition speculation into a frenzy.

On the fundamental front, established mining stocks continue to offer sound value, when measured against historical metrics. ..

Weakness in the US housing market could be viewed as bullish for commodities, argues BCA Research, because it caps the cost of capital. Outside of the US, "plentiful liquidity conditions and savings keep the global risk-free interest rate low, boosting investor willingness to buy into risky assets such as commodities, both on a speculative basis and over the long term".

BCA Research argues that low interest rates also encourage industry consolidation, which boosts pricing power. Furthermore, "robust investment trends in emerging economies are commodity-intensive, and a huge tailwind for commodities. Finally, supply bottlenecks remain stubborn and exploration costs continue to mushroom".

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