Copper diggers dislodge gold peers
It’s been on the cards for more than a month, and on Friday, listed copper stocks overhauled the stock gains made by their peers in the gold group. A sampling of 93 copper stocks listed around the world, including 69 that rank as primary copper miners or developers have gained 141%, on a weighted average basis, over the past six months. Measured on the same basis, 247 listed gold stocks have gained 138% from trough prices seen during October and November 2008, when the world’s self-described financial crisis appeared to be at its worst.Copper prices have been on a rip; after collapsing from record highs of USD 4.08/lb in mid-2008 to USD 1.28/lb in December, prices have risen to just under USD 1.90/lb, a level at which close to 100% of copper miners around the world are making profits, at least on a cash cost at-the-mine basis. Gold bullion, on the other hand, has been wont to find itself vulnerable to downward price pressure as investor risk appetite increases in proportion to the perceptions that the heat is cooling on the "global financial crisis”. There have also been increasing reports about price elastic falls in physical bullion buying from India, the world’s biggest buyer of the yellow metal. There is also some concern over planned gold sales by the International Monetary Fund. At the same time, copper purchases by China, by far the biggest market for the metal, have been showing signs of sustainable stability and indeed increases, and copper stocks around the world have been falling. Investors have been switching heavily from listed gold to copper stocks for more than a month, although inflows to the gold grouping have remained positive over the period. Measuring proportionate price performances of the world’s five biggest copper producers is difficult for a number of reasons. Chile’s Codelco, the world’s biggest, is State-owned and unlisted; Freeport-McMoRan also ranks as the world’s biggest producer of molybdenum, and also as a Tier I gold producer; BHP Billiton ranks as the world’s biggest diversified resources stock, while Xstrata and Rio Tinto rank as diversified miners with a good number of other interests.However, copper specialists such as Jiangxi Copper and Yunnan Copper have both bounced more than 100% from trough prices, along with Southern Copper, Antofagasta, KGHM Polska Miedź, Sterlite, Tongling, First Quantum, and others. Once again, there are complicating factors, with byproducts, such as KGHM Polska Miedź ranking as one of the world’s biggest silver miners (just as Barrick, the world’s biggest primary gold miner by value and production also produces lots of copper).The stock price for budding copper miner Equinox (which also has uranium that it could produce at its Lumwana operation in Zambia) has bounced by 169%. Northern Dynasty, a copper developer, has produced the best composite stock price performance among bigger copper specialists. Its Pebble project in Alaska, which also ranks as one of the world’s biggest gold deposits, has secured Anglo American as a partner.Ivanhoe, increasingly marketing itself as a copper-gold name on the back of its Oyu Tolgo project in Mongolia, has registered a stock price bounce of nearly 300%. For the meantime, miners (and investors) who have just copper and gold in their baskets are in the best of both worlds. First Quantum, Africa’s leading copper producer, is also going to produce around 250,000 ounces of gold this year, and ranks as one of the best performing "copper stocks".