Gold and base metals like copper have been driving the share price of of diversified miners and gold miners up, and companies like Teck Resources Limited (NYSE:TCK), Freeport-McMoran Copper & Gold Inc. (NYSE:FCX),
Goldcorp (NYSE:GG) and Barrick Gold (NYSE:ABX) are poised to report strong third quarter earnings as a result.
While some note that the mining companies haven't been keeping up with the rise in price of metals, that isn't too relevant, as they're still moving up at a nice pace, and will continue to do so in general, with some companies obviously outperforming others.
Whether the market pays a premium or not doesn't matter, what matters is that the trajectory in general continues upward, which it is sure to for mining companies exposed to the right metals.
Mining companies will need to temper expectations by pointing to this reality, but other than that, there really isn't a downside to the market, as long as the companies continue to work on bringing costs down.
That, more than anything, will allow them to profit in almost any economic environment, as margins will continue to be solid even if revenue falls in the years ahead.
The reining in of company performances in light of the movement of commodity prices is really good for the sector, as it helps to keep share price performance closer to reality than moving in huge swings with commodity prices.
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