The Mining Stock Boom Has Dramatically Outstripped Rising Metals Prices – by Mike Bird and Ese Erheriene (Wall Street Journal – May 9, 2016)

Compared to their average over the last six months, mining stocks have exploded upwards, breaking the link with base metals

Mining stocks are rallying far ahead of the price of metals they mine, leaving some analysts wondering whether they have overshot fundamentals.

Over each of last four weeks, mining and metals companies on the MSCI AC World index have risen by at least 17% compared to their level averaged out over the previous six months. The gain on each of those four weeks was a record stretching back to 2002.

Though metals prices have also risen, on the back of dollar weakness and speculative buying, the gains have not been as sharp. Copper prices, for instance, have risen by as much as 6.6% compared to its six month average price.

Looking at the trend since 2010, equity prices have climbed by a lot more than the rise in base metals would suggest.

Collectively, industrial metals are up an average of 6% since the start of the year, but consensus over their future direction is divided, with most analysts predicting declines in the near-term.

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