Far East Capital Newsletter
Mental health of traders could do with an adjustment
17 Feb 2024

In This Issue

Mental health of traders could do with an adjustment

The stock markets are booming all around the world with many indices at or near record highs. Australia is no different. The All Ords has been very strong, the Energy Index is in a recovery uptrend and the Information Technology Index is surging. So, why is the Metals and Mining Index in downtrend? Is this a temporary market failure or is it telling us something is wrong?

I am inclined to say that there is nothing wrong - other than severe depression caused by the collapse of prices in battery and green energy commodity prices such as lithium and rare earths. Sure, there is great pain in the nickel sector but this has more to do with oversupply than a collapse in demand, with prices almost half what they were a year ago. The Price of aluminium, copper, lead and zinc have been relatively stable over the past year within their trading ranges. Iron ore prices have been trending higher since mid 2023. Tin has been ticking up more recently. Uranium is in a bull market and gold has been consistently strong. As I said, there is nothing that justifies the extreme pessimism in the mining and exploration stocks - other than the collapse of prices in lithium, rare earth and related commodities. 

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