Mining Has Reasons for Optimism and They’re Not All Donald Trump – by Thomas Biesheuvel and Jesse Riseborough (Bloomberg News – November 14, 2016)

It isn’t Donald Trump alone who’s making the mining industry great again. Though, he’s surely lent a hand. His victory in the U.S. presidential election after pledging an infrastructure splurge pushed copper prices up 11 percent last week, the best performance in more than five years. Mining shares reached the highest in almost two years.

The gains, continuing this week, are a huge turnaround from the start of 2016. Commodity prices sank to near a seven-year low in January, with the some of the largest miners fighting for survival under the weight of their debt.

“After a four- or five-year bear market, we’ve been clobbered over the head so many times we don’t believe in optimism,” said Jeremy Wrathall, Investec Plc global natural resources chief. “That is changing, it’s definitely changing.” Where some see fizz, others see froth.

Copper’s gain “appears premature,” driven by speculation by investors in China, and will fall back by the end of the year, Citigroup Inc. analysts including David Wilson said in a note. The euphoria after Trump’s win is “inexplicable” and is set to peter out, according to Commerzbank AG.

Copper’s lead in the industrial metals surge is partly down to it being the most-traded and easiest to buy and sell, as well as its role as a proxy for speculation on faster economic growth.

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