Commentary: Despite rising metals prices, Apple’s market cap overtakes entire mining sector

An Agnico Eagle worker monitors operations from his desk. Credit: Agnico Eagle Mines.

The nights are drawing in, and the Autumn equinox is upon us in the Northern Hemisphere, with an equal duration of light and dark on Sept. 22. On the positive side, there is an R in the month, so we can eat oysters in the United Kingdom. This advice dates to at least 1599, when it appeared in Henry Buttes’s cookbook, Dyets Dry Dinner, although some historians trace it to an ancient Latin saying.

This folklore is based on common sense, since the four months without an R — May through August — coincide with summer in the Northern Hemisphere. The warm months are bad, or even toxic, for oysters as shellfish were more likely to spoil in the heat. Oysters also spawn in the summer months so, with most of their energy spent on reproduction, oyster meat is liable to be thin and milky.

Another popular mid-year adage in the U.K. is, “Sell in May and go away, and don’t come back till St. Leger’s Day.” This advice is intended for investors rather than gourmands, although it coincides with oysters being out of season.

The St. Leger Stakes is a horse race run on the middle Saturday in September, which falls on the 12th this year, and is the culmination of a four-day festival in Doncaster. The race, established in 1776, is the oldest — and longest, at almost 3,000 metres — of Britain’s five classic races, and is the last one run each year.

The advice to sell in May has had mixed results for metals investors in recent years — and was catastrophic for them this year. Staying away from commodity markets during the middle one-third of 2020 would have left investors missing out on price rises of 15% for gold, over 20% for aluminium, around 30% for nickel, copper and zinc, and a massive 48% for iron ore (62% Fe).

The advice (sometimes known as the Halloween indicator) was a generally profitable guideline for metals investors in 2019, 2018 and 2016, but was expensive advice to have followed in 2017.

With two notable exceptions, selling metals at the start of May 2019 and buying them back four months later would have been beneficial. The exceptions in the middle third of last year were gold (up 20%) and nickel (up an impressive 47%). The central period was also weak for most metals in 2018 (especially zinc), although the price of aluminium and iron ore did improve in the middle four months after a weak first third of the year.

Following the historic adage would not have been profitable investment advice in 2017, when the middle part of the year was the strongest four-month period for most major metals. In 2016, however, the middle third was the weakest period of the year for many metals, with copper and iron ore suffering particularly poor performances.

Whether you follow the adage, or not, according to S&P Global Market Intelligence (based on an analysis of 2,311 listed companies) the strong metals-price recovery since the end of April had lifted the mining industry’s cumulative market capitalization to US$1.59 trillion by the end of July. This is the highest valuation since January 2018, and represents an improvement of 50% since the four-year low of US$1.06 trillion four months ago.

The joy at improving mining-equity values was tempered somewhat by the news in August that the market capitalization of Apple Inc. had just hit US$2 trillion, or one-quarter more than the value of all listed mining companies. Still, us Europeans can at least now eat oysters.

— Dr. Chris Hinde is a mining engineer and the director of Pick and Pen Ltd., a U.K.-based consulting firm he set up in 2018 specializing in mining industry trends. He previously worked for S&P Global Market Intelligence’s Metals and Mining division.



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