The missing ingredient is growth

John Robertson


Measured relative to the average duration of historical metal cycles, we are nearing the bottom of the current cycle now. Our historical modeling suggests the bottom could be three to four months away. If only life were that simple! A precondition for the onset of a fresh cycle is an acceleration in global growth. As the International Monetary Fund has shown in its recently revised global economic forecasts, a meaningful pickup in growth has become less likely as successive forecasts have been wound back. Europe, the USA, Japan, China and most major emerging economies are battling to sustain existing growth rates. Central bank policies, always more likely to affect asset prices than the real economy, are making little net impact on the growth outlook in the near term. Without an upside surprise to growth which raises the risk of commodity shortages, the mining industry is likely to keep markets adequately supplied preventing the need in the foreseeable future (possibly over the next 3-4 years) for an improvement in cyclical price conditions.

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.