MaxMarioni
Member Since 23 November 2015
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Last Seen: 20 Jan '18

MaxMarioni's Insights

On the topic of Copper

Gold fever is declining. Other raw materials such as industrial metals however, are rallying, suggesting that the long downward cycle that has hit the industry is coming to an end. Goldman Sachs is convinced of this: for the first time in four years, it is urging investors to put their money into commodities. Just look at miners' reversals in performance: AngloAmerican has quietly abandoned its asset disposal plan which was announced only this February, showing that the goal of reducing debt is already on the way to being achieved. In the last months, raw material prices have strengthened, often with double-digit if not triple-digit rises. In the US, following Donald Trump's election to the White House, stocks belonging to the natural resources sectors were the ones who saw the biggest increase amid the post-election rally, with an 11% rise for the Eurostoxx sub-index against 8.3% for the Dow Jones. Since the January lows, Anglo and the other four big mining titles (BHP Billiton, Rio Tinto, Vale and Glencore) have more than doubled their market capitalisation. Also Glencore has stated they will restart dividend payments in 2017. In fact, Anglo and Glencore may soon regain their status as income stocks. But investors looking for a reliable, rising dividend income will remember how easily these payouts were cut. Back in January, it was been a surprise gold rally whichbrought the attention ofinvestors to commodities. But the precious metal, after a brief rally that immediately followed Trump's shock election victory seems to have fallen out of favor. With the Federal Reserve now ready to raise the cost of money, the dollar reaching its highest level in 13 years, and Wall Street churning out new records every week, bullion has lost its appeal among investors.Gold ETFs - which had grown to record-breaking pace in early 2016, are falling without interruption. If gold is losing its shine, its rise during the year to date is still 12%. But the less noble metals are shining brighter: almost all non-ferrous are up by over 20% in 2016, with zinc, nickel, aluminum and tin rising to multi-year highs on the London Metal Exchange. Even copper eventually joined the rally, overtaking the 6 thousand dollars per ton. Even more spectacular is the performance of other industrial commodities, especially those used in the steel industry, such as coke coal, which appreciated by over 300% this year, and iron ore, which has gained more than 60%, reaching the highest since two years.   (Read more)

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