Mining stocks have rallied. The jury’s out on what’s next
Mining stocks are on the decline as many metals set consecutive records, but analysts are divided on whether that will continue.
February gold futures It reached a record $5,100 per ounce on Sunday and March silver futures It reached a peak of $115.5 per ounce the next day. Investors tend to flock to gold in uncertain times because it is seen as a safe haven, while silver tends to follow the yellow metal.
Copper has also increased significantly since August after prices fell significantly; but this is likely driven by electrification and demand for equipment using copper.
The iShares MSCI Global Metals and Mining Producers ETF hit an all-time high of $59.58 on Monday. Rio TintoGlencore, which is in talks to acquire Glencore, hit its highest point since March 2021 on the same day; And FresnilloIts stock price has soared over the past year, reaching a record high of $4,448. Antofagasta also reached its all-time peak.
“We’ve seen mining stocks particularly in the races. I think this continues to be a defensive play in the markets,” Rory McPherson, chief investment officer at Wren Sterling, told CNBC’s “Squawk Box Europe” on Jan. 26.
He said miners, particularly in the UK, were “still very underowned stocks”, which could help push prices higher.
However, the size of the rally raised questions about whether precious metals were a defensive play.
“Given their natural cyclicality, I wouldn’t describe mining stocks as defensive at the best of times. Even less so given the overall rally in mining led by gold and other precious metals, copper and aluminum,” Jon Mills, an analyst who tracks global miners for Morningstar, told CNBC via email.
Mills stated that in addition to the excitement about gold, aluminum and copper, the iron ore price continues to remain strong around $105 per metric ton, and that iron ore is the biggest profit driver for many large miners, including large miners. BHPRio Tinto, ValleyAnd Fortescue.
“In terms of minor metals, silver is also at historic highs, while platinum has recently retreated slightly after reaching an all-time high. Even lithium has recovered significantly in recent months after falling to cyclical lows in 2025,” he added.
But according to a report, appetite for mining stocks has waned in the last six months. Citi The memo was announced on January 26. Ephrem Ravi, one of the investment banks, wrote that during this period, Buy ratings decreased from over 70 to 60, while Neutral and Sell ratings increased.
He sees three reasons for the change in sentiment. “Most of the miners are iron ore-oriented and iron ore prices are intermittent,” Ravi said. He added that the share prices of major miners have increased by about 20% to 50% in the last six months, mainly due to higher copper and aluminum. Therefore, valuations have been pushed up and the investment scenario has become less attractive.
However, Citi maintains a bullish short-term view on gold amid rising geopolitical risks, supply shortages and ongoing uncertainty about the Federal Reserve’s independence in the face of pressure from President Donald Trump.
Precious metal miners in particular “have become incredibly expensive,” Panmure Liberum strategist Joachim Klement told “Squawk Box Europe” on Jan. 27.
“They’ve rallied too much based on this gold and silver rally, which to me looks a little bit unsustainable in the short term,” he said.
