The commodities and metals bull market is now in its sixth consecutive year. The vast majority of investors, professional and lay, are now taking resources stocks, along with commodities and metals, quite seriously. For a good number of investors, this has been a tricky business, but like it or not, miners, sweaty, with oil stained overalls, are sexy for the first time.
Rio Tinto, the world’s third-largest mining company, forecast global aluminum demand to rise. Brazil’s Cia. Vale do Rio Doce, the world’s largest iron-ore producer, said profit jumped on higher output and prices.
The S&P/ASX 200 added 35.50, or 0.5 percent, to 6,659.80 as of 10:35 a.m. in Sydney. Futures on the index due in December gained 0.8 percent to 6,686. The broader All-Ordinaries Index rose 0.5 percent to 6,678.60.
Resources stocks are truly global in nature, giving investors a vast array of choice. At this point, major diversified stocks are leading in terms of stock price performance, led in turn by BHP Billiton, and also Norilsk, a Russian-based stock. Among smaller diversifed stocks, African Rainbow Minerals is running hard, not least on its exposure to platinum and iron ore.
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Among specialized sub-sectors in the resources universe, iron ore stocks, which may sound as sexy as cold pizza, sit at the forefront. Apart from the three giant iron ore diggers (which are classified as diversified stocks), viz., CVRD, BHP Billiton and Rio Tinto, top iron ore choices include Kumba Iron Ore, Labrador Iron and Midwest.
Oil stocks are next up; here the top choices could include Oilexco and Petro Rubiales. Zinc stocks are rare, but are also running hard; here a good choice can be found in HudBay Minerals.
Nickel stocks are back on the radar screen, and here the running favourite is likely Sherritt, which is finding increasing support after the takeovers of Falconbridge, Inco, LionOre and Rio Narcea. Coal stocks, where Consol Energy provides an excellent holding, rank next in performance terms.
Copper stocks, where there is a wide choice, have performed well on a resurgent metal price; top names here include Equinox and Frontera Copper. Copper dogs may include Camec, which indulges in a weird business plan in the Democratic Republic of the Congo, and also Constellation.
Precious metal stocks have not performed as well as less pretty metals, and are led by gold stocks, where Tier I performance has lately been led by Kinross and Lihir. The top choice in the Tier II category would likely be Randgold Resources; in Tier III, it would be Jaguar Mining, and, among juniors, probably Andina and Comaplex. There are lots of gold dogs, but perhaps special mention should be made of DRDGOLD and Bendigo.
Among platinum stocks, special accolades go to Aquarius, Anooraq, Platinum Australia, and Braemore. A special dog award for over-promising and under delivery goes to Tier I member Lonmin.
Among silver stocks, kudos to Hochschild Mining, Penoles, Silvercorp Metals, Silver Wheaton, and Silver Standard. Again, there are too many dogs to mention in this sector, but Apogee Minerals and Mexican Silver should not be forgotten.
Finally, the entire uranium stocks sector would be a dog, were it not for Cameco, the world’s biggest listed producer, and the one which stood aside as the sector turned into a dot.com-type circus earlier this year. Even so, special hyena status could be awarded to Forsys and Western Prospector.