Is Dr. Copper Going To Confirm A Long-Term Mining Breakout?

 It is not only Oil that has proved strong in the Commodity space this year so far: Cocoa and Coffee have gained this year, as have a variety of Metals. Below, I present 5 charts that look at the breakout of base metals from their 2011-2013 bear market, which is also leading global mining companies higher. 

1. Industrial Commodities No Longer in Downtrend: 
Even Excluding Oil, Commodity Index Is Moving Higher

Source: Bloomberg

2. Base Metals Moving Higher (1): Aluminium

Source: Bloomberg

3. Base Metals Moving Higher (2): Nickel

Source: Bloomberg

4. Copper Is The Most Important Signal:
Will (Dr.) Copper Now Also Break Out to the Upside?

5. Miners Are Following The UpTrend in Metals

Macro Summary: 

• Non-Oil Commodities Stronger: Industrial commodities are in an 8 month-long uptrend.
• Aluminium & Nickel are both showing impressive recent price momentum.
• Dr. Copper – the most important industrial metal – has yet to clearly break out of its 2011-14 downtrend: Key Macro Signal
• Global Mining Companies Are Following Metals Trends Higher: but only tracking the broader stock market for now.

Base and Precious Metals Mining Could Be a New Multi-Year Mega Theme!

Stocks To Investigate on This Theme

Base Metals Exposure

Looking to the UK and European stock markets, there are a number of obvious candidates to play any continued upswing in base and precious metals prices. 

Within base metals (plus iron ore and coking coal), you can play the global diversified companies that are UK-listed including Rio Tinto (LON:RIO), BHP Billiton (LON:BLT) and Anglo American (LON:AAL) along with metals producer and trader Glencore (LON:GLEN). 

If you want more specific exposure to the copper price, then Antofagasta (LON:ANTO) and Kazakhmys (LON:KAZ).

Precious Metals Exposure

For gold and silver mining exposure, then you have an embarrassment of riches to choose from, including Fresnillo (LON:FRES), Polyus Gold International (LON:PGIL) and Randgold Resources (LON:RRS) within the larger mining concerns. 

Centamin (LON:CEY) is a FTSE-250 index component with precious metals exposure and a very attractive combined StockRanks score of 94:

Centamin is Top of the StockRanks,
Represents Potentially Good Value

But I spy real value in certain small- and micro-cap names, of which Caledonia Mining (LON:CMCL) is one I am looking at particularly closely, even with only a market capitalisation of £24m - a real value investor's treasure trove!

Caledonia Mining Offers a 95 Combined StockRank,
over 50% of market Cap in Cash, and a High Dividend Yield

So DYOR as ever, but be mindful of this neglected corner of the stock market where trends are a-changing!

Edmund