Bull Market Thinking
I was able to connect with the legendary Don Coxe this week, chairman of Coxe Advisors LLP, during a time in which investor sentiment in the mining and precious metals sector has reached levels of “despair and cynicism”, the likes of which Don has never seen before.
What was encouraging to note however, was that in response to investor sentiment, large mining companies are cutting projects and plans to build new mines—which according to Don, will extend and further heighten the next up-cycle, as well as create shortages in the metals later this decade.
Reflecting on the recent BMO Metals & Mining conference, Don explained that, “The new CEO of Barrick…promised that after they complete their last big project, which will be done in two years—they’re not going to be developing any new mines for a long time. You never once heard that kind of statement being made at a conference from 2003 to 2012…looking further out (because the commodity boom is still intact), we won’t be getting a new generation of mines being brought in 3-4 years from now. So the next shortages will probably develop later in this decade.”
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