Global mining stocks have surged to the forefront of fund managers’ portfolios, driven by a burgeoning demand for metals and constrained supplies of essential minerals, signaling a potential new supercycle in the sector. The MSCI Metals and Mining Index has soared nearly 90% since the start of 2025, significantly outperforming sectors like semiconductors, global banks, and the renowned Magnificent Seven technology stocks.
This remarkable rally shows no signs of slowing down, fueled by the increasing demand for robotics, electric vehicles, and AI data centers, which continue to push metals prices to unprecedented levels. Copper, a crucial element in the energy transition, has experienced a 50% surge over the same period. Analysts remain optimistic about other minerals such as aluminum, silver, nickel, and platinum, while gold continues to benefit from concerns over U.S. monetary and fiscal policies, alongside geopolitical tensions.
Reversal of Fortune for Mining Stocks
The current outperformance marks a stark reversal from previous years when the mining sector struggled due to volatile commodity prices and fears of an economic slowdown in China, the world’s largest metals consumer. Fund managers, who had previously favored tech and financial stocks, are now buoyed by Beijing’s commitments to bolster the economy through measures like interest-rate cuts.
“Mining stocks have quietly moved from a boring defensive sleeve to an essential portfolio anchor — one of the few sectors positioned to capture both shifting monetary policy dynamics and an increasingly volatile geopolitical landscape,” said Dilin Wu, a research strategist at Pepperstone Group Ltd. in Melbourne.
Commodities as Structural Investments
A significant factor driving this shift is the evolving nature of commodities such as copper and aluminum, which have become less tied to economic cycles. Historically viewed as short-cycle trades, these commodities are now seen as structural investments, benefiting from strategies that align with the AI theme.
As a result, investors are quick to “buy the dip” whenever weak data impacts mining stocks. According to Bank of America Corp.’s monthly survey, European fund managers currently hold a net 26% overweight in the sector, the highest in four years, though still below the 38% net overweight recorded in 2008.
Valuation and Strategic Relevance
Despite the sector’s burgeoning appeal, mining stocks remain undervalued. The Stoxx 600 Basic Resources index trades at a forward price-to-book ratio of about 0.47 relative to the MSCI World benchmark, representing a 20% discount to the long-term 0.59 ratio and significantly below previous cycle peaks above 0.7.
“This valuation gap persists even as the strategic relevance of natural resources has risen materially,” noted Morgan Stanley analysts led by Alain Gabriel.
Gabriel also highlighted the industry’s increasing preference for mergers and acquisitions over new developments. Notable transactions include Anglo American Plc’s acquisition of Teck Resources Ltd. and a potential merger between Rio Tinto Plc and Glencore Plc. This trend is driven by the capital-intensive nature of the industry and miners’ desire for scale and portfolio optimization, particularly in copper.
Risks and Cautious Optimism
Despite the optimistic outlook, some investors remain cautious due to the rapid pace of the rally. Bank of America downgraded the sector to underweight in Europe, citing potential risks from negative economic surprises. Nick Ferres, chief investment officer for Vantage Point Asset Management in Singapore, has temporarily reduced gold exposure.
“I get concerned when the price of any asset moves non-linear or parabolic, that is why we are a bit cautious at the moment,” Ferres said. “But the miners are very inexpensive. If gold remains elevated, we would re-enter or scale back up on a pullback.”
Bloomberg Intelligence forecasts a persistent copper deficit this year, with potential supply shortfalls exceeding those of 2025. On gold, BI analysts predict bullion could reach $5,000 an ounce, while Goldman Sachs Group Inc. anticipates it hitting $5,400 by the end of 2026, about 8% above current levels.
“The upside drivers for commodities are now more powerful and more diversified,” said Gerald Gan, chief investment officer at Singapore-based Reed Capital Partners Ltd. “In the coming months, we plan to gradually increase our portfolio exposure to mining stocks.”
The announcement comes as the global economy continues to navigate complex challenges, with mining stocks positioned to play a pivotal role in capturing the benefits of shifting economic and geopolitical landscapes.
