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Miners: strength in diversity

BlackRock |21-Oct-2016

FTSE/MSCI World Miners vs FTSE/MSCI
World Gold Miners, year to date

FTSE/MSCI World Miners vs FTSE/MSCI World Gold Miners, year to date

Source: Thomson Reuters Lipper for Investment Management. Daily Price in USD of the FTSE Gold Mines, and FTSE World/Mining Total Return indices. Data taken from 4th January 2016 to 12th October 2016.

    • In recent weeks the gold price has fallen after a strong start to the year, and the share prices of gold miners have followed the metal down
    • Gold had suffered from heightened expectations that the Federal Reserve was likely to increase interest rates later this year, which could weaken demand for non-yielding assets like gold
    • As the chart shows however, despite the impact on gold miners the wider mining sector demonstrated its resilience as share prices remained steady
    • This suggests the value of diversified rather than concentrated commodity exposure, as different parts of the market can move in different directions at the same time

 


Question for your clients:

  • How exposed are your resource holdings to any one commodity?

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