Pent up demand: mining portfolio flows tracked
A sharp lift in spirits in US markets on Tuesday, triggered by apparently positive news from Citigroup - which jumped 26% and more - and positive comments from Ben Bernanke, chairman of the Federal Reserve, the US central bank, drove a broad based market rally, dominated by financials, and also names from the broader global resources sector.In line with sparks of confidence that a global economic recovery was possible, dollar prices for gold and silver bullion slipped - gold below USD 900 an ounce - while industrial metal prices rose, along with prices for soft commodities and crude oil, which shifted above USD 47 a barrel. An analysis of intra-day stock portfolio flows shows that investors were making heavy switches out of gold and silver names, into big iron ore names - which also rank as major diversified miners - BHP Billiton, Vale, and Rio Tinto.There was also a demonstrable demand for specialist miners of industrial metals, with copper stocks leading the list in the form of strong price rises for Southern Copper, Antofagasta, KGHM Polska Miedź, and Freeport-McMoRan; most smaller names, such as Quadra, were also rising. Potash miners were also attracting strong flows, led by Russia’s Uralkali, and followed strongly by Qinghai, Mosaic, and PotashCorp.Aluminium stocks were next most attractive, led by Alcoa, a member of the Dow Jones Industrial Average, and supported by Norsk Hydro. Nickel names were strongly led up by the world’s biggest miner of the metal, Norilsk, strongly supported by Eramet. Oil stocks were also in good demand.Seen on a longer term basis over the past 12 months or so, the highest relative stock price gains remain in the hands of gold and silver miners, followed by copper stocks. The world’s top 100 miners, measured by market value, are now priced 67% higher, on average, than four months ago. Gold stocks are 108% higher, seen on the same basis, while silver stocks are 129% higher, and copper stocks nearly 100% higher. Seen on the same basis, again, the Dow Jones Industrial Average is up 12% from its lows.