Since 2015, mining stocks have hovered around historically depressed levels, relative to the price of precious metals.
But is the cycle about to turn? Could be mining stocks be the trade of 2023?
One prominent macroeconomic analyst who thinks 2023 could be the year mining stocks finally break out, is Crescat Capital’s Tavi Costa.
“One of the things that they (stock market investors) are mostly concerned about is this issue with under performance of the overall industry relative to Gold itself, and it’s a fair argument,” says Costa.
He refers to the chart below, shared by Crescat Capital in an investor presentation this week, which shows the mining stocks-to-gold ratio.
“I do think that since this bottom you can see in the chart back in 2015, we’ve been in the beginning of an upward trend and very likely we’re probably going to break out from this.
“The main reason for this, in my opinion, comes down to the growth-to-value transition that we’re seeing. I think that one of the most important parts of this argument is we’ve seen mining companies actually do everything they can to attract capital over recent years, but how undervalued they are in terms of the metrics we look at it, it is really historic.”
Costa believes a major inflow of capital into the mining space is imminent, which will benefit not only large cap mining stocks, but small and microcap explorers too.
“I would be watching this this ratio very closely because I think we’re close to a major breakout… which is probably going to mark the beginning of a secular move for the miners, which is perfect timing when everyone is a skeptic and markets love to do the opposite.”
Best mining stocks to buy?
Crescat Capital named gold mining stock to watch, including Canadian gold explorers Snowline Gold (CNSX: SGD) and Eskay Mining (CVE: ESK), Canadian copper explorer Brixton Metals (TSXV: BBB), and Arizona-headquartered minerals explorer, Western Alaska Minerals (CVE: WAM).
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