INVESTMENT INSIGHTS http://www.mineweb.com/mineweb/view/... Gold on top: Ranking 18 global mining sectors Gold and silver stocks are relatively top performers, while diamonds, non-Asian coal, and nickel stocks, sit at the sorry bottom. Author: Barry Sergeant Posted: Wednesday , 04 Mar 2009 JOHANNESBURG - The past 12-month performance of 947 listed resources stocks around the world shows unequivocally that gold and silver stocks not only dominate relative outperformance within the broader resources sector, but that these stocks also qualify to rank as the top outperformers across all equity subsectors. On the flip side of the coin, there are some very sorry looking underperformers at the other end of the scale among 18 resources subsectors. The MSCI Barra dollar index for all global equities, always a useful benchmark, currently languishes 55% below its 12-month highs, and, indeed, currently at its lows for the period. While 250 listed gold stocks around the world may be 50% below high stock prices, measured on a weighted basis, they have bounced up 111% from lows seen around four months ago. The Tier I gold sector, taken most seriously by big institutional investors, has bounced on average by 96% from lows; Barrick, the world's biggest gold name by production and value, is up 64% from its US-quoted stock price lows. The world's 13 biggest gold diggers, loosely the Tier I group, carry an aggregate market value of $132bn, comprising a substantial portion of the global listed gold group's total market value of $189bn. The total global market value of primary silver miners is far smaller, at $10bn - most silver is produced as a byproduct at other mines - but this sector has, as always, an enthusiastic following. Sectoral performance is led by Fresnillo, the world's biggest primary silver miner, with a market value of $3.5bn, and also a rather spectacular stock price performance over the past while. Following listed gold and silver stocks, gold and silver exchange traded funds (ETFs), which hold physical metal on behalf of investors, and are not operating companies as such, rank as the next best performers. The global sector is led by the SPDR Gold Shares ETF, which currently trades - like dollar gold bullion - just 10% below its highs, and now holds $30.3bn worth of the yellow metal. Zinc, copper, uranium, tin and potash miners follow next on the list. The relatively cheerful performance of base metal miners may be surprising, given that most dollar base metal prices are looking for fresh five or six year lows. On the other hand, miners have taken all kinds of drastic action, over the past six months in particular, and some equity investors with a taste for risk appear to be taking early bets on the possible payback for miners that have had the wherewithal to remain in business. Individual zinc names such as Yunnan Chihong, Shenzhen Zhongjin, and Hindustan Zinc have performed very well of late, and debt-stricken Oz Minerals appears to be the beneficiary of a white knight move by Hunan Valin. In copper, the return to some respectability has been led by larger names such as First Quantum, Antofagasta, Jiangxi Copper, and KGHM Polska Miedź. In uranium, positive performances have stemmed mainly from developers, where there has also been a fair degree of corporate activity; leading performers include First Uranium, Forsys, Extract Resources and Bannerman. In tin, a small global sector representing the smallest of the base metals, performance has been hugely dominated by Yunnan Tin, which has seen its stock price bounce nearly 100% from the bottom. The performance of potash stocks remains dominated by the ongoing possible early recovery in stock prices of the two biggest names in the business, PotashCorp and Mosaic, with a combined market value of $41bn, a healthy chunk of the combined global listed potash market value of $87bn. These are full valuations that include further company interests, typically the mining of phosphates, and producing nitrogen. At the other end of the scale, diamonds rank as the world's worst-performing resources sub-sector, by an impressive margin. Some of the world's biggest diamond miners, such as De Beers and Alrosa, are unlisted, and some big diamond mines sit inside diversified names, not least BHP Billiton, and Rio Tinto. Even so, the weighted performance of 40 listed diamond stocks, where Gem Diamonds and Harry Winston rank as the biggest, shows an average stock price loss of nearly 90%, and an aggregate market value of just $764m, down from $6.2bn at the peak. After diamond stocks, non-Asian coal stocks rank as the next most rotten relative underperformers. The downside here has been led mainly by US names, led, in turn, by the likes of Patriot Coal, Alpha Natural, and Massey Energy; some stocks in this area, such as Natural Resource Partners, have performed fairly well, on a relative basis. On the other side of the world, a number of Asian coal stocks have been doing pretty well, not least Shanxi Xishan, and Bumi Resources. Nickel stocks sit next up from the bottom, led by Norilsk, currently trading 85% off its highs, and Aneka Tambang, down 72% from highs. The nickel sector continues to bleed, as seen this week in announcements by Albidon. Next up are oil stocks, followed by coal stocks (in general), platinum stocks, aluminium stocks, and iron ore stocks. Exxon Mobil continues to rank as the most valuable stock of any kind in the world, with a market value of $318bn, and a price that's a third off its high, far less than the 57% number produced by the global weighted average for oil stocks. Anglo Platinum, the world's No 1 platinum producer, continues to lead the broad underperformance of its sector, while in aluminium, a debt-laden Alcoa sits 90% off its price highs, and is a shadow of its former self. Alcoa's market value currently sits at $4.4bn, far off its $36bn high. Rival Chinalco, busy trying to extend its investment into Rio Tinto, sits with a market value of $13.5bn. GLOBAL LISTED RESOURCES STOCKS Composite weighted 12-month net price gains/losses IMC* Stock $bn sample Tier II gold stocks** 116.1% 40 19 Gold stocks 60.8% 189 250 Silver stocks 55.5% 10 43 Tier I gold stocks** 46.9% 132 13 Gold ETFs 26.4% 41 9 Silver ETFs 10.7% 4 3 Zinc stocks 6.1% 3 12 Copper stocks 3.8% 48 75 Uranium stocks 3.1% 12 117 Tin stocks 1.8% 2 13 Potash producers -10.7% 68 12 Uranium producer stocks** -10.8% 8 5 Molybdenum stocks -12.6% 7 20 Tier I iron ore stocks** -14.3% 63 3 Mining majors** -20.2% 458 20 Iron ore stocks -22.4% 104 84 Aluminium stocks -26.6% 21 12 Tier I coal stocks (Asia)** -29.5% 88 20 Tier I platinum stocks** -32.8% 19 3 Platinum stocks -33.3% 25 52 Oil sand stocks -34.1% 25 15 Coal stocks -35.9% 184 122 Oil stocks -42.8% 1481 47 Tier II iron ore stocks** -44.0% 32 16 Nickel stocks -46.0% 19 32 Tier I coal stocks (non-Asia)** -47.3% 29 30 Diamond stocks -62.4% 1 41 TOTALS 2197 947 * Investable market capitalization ** IMC counted in other sub-sectors Sample is 947 listed companies. Source: Analysis by Barry Sergeant Note: All samplings are operating companies, with the exception of ETFs Note: the 12-month price gain/loss calculation assumes 1. A weighted amount of USDs are invested in each of 947 stocks 2. At the stock's lowest price in the past 12 months, and 3. That each stock is still held at the current date.