Gold prices get most of the attention, but gold is in fact only a small part of the metals and mining sector. The category includes the precious metals gold, platinum, and silver, plus industrial metals steel, copper, and aluminum. Mineral mining involves the extraction of coal, shale, limestone, chalk, rock, potash, gravel, and clay as well as precious gemstones like diamonds.
Gold and silver will continue to serve as counter-cyclical hedges and are seen as safe havens during times of recession, inflation, or uncertain monetary policy.
That is not to say that gold prices will not continue to have their ups and downs.
Most of the other components of this sector are subject to the forces of market demand, resource scarcity, and product innovation.
- Gold prices had a good year in 2020, but the World Bank expects them to decline through 2030, barring the kind of economic downturn that causes an investor flight to this safe haven.
- Industrial metals and mining products like copper and zinc are expected to rise moderately through the year 2030.
- Among precious metals, only platinum is seen as rising in value in the near future. It's both beautiful and useful.
What's Happening to Gold Prices
Gold had a good year during the 2020 COVID-19 pandemic, with the price climbing more than 25% over the previous year to $1,740 per ounce. It proved its value as a safe haven once again.
That may not last. In its forecast for world commodities prices, the World Bank sees gold prices dropping steadily from year to year, hitting $1,181 in 2030.
The projection is based on an assumption that a global economic rebound can be expected after the pandemic, giving investors plenty of choices and a decreased desire for safety.
The World Bank has a more positive outlook for other industries in the metals and mining sector, from aluminum and copper to platinum.
Outlook for Metals and Mining
Commodities prices in general recovered from their pandemic levels in the first quarter of 2021 and can be expected to remain fairly steady for the rest of the year, according to an analysis by the World Bank.
Its report concludes that the planned major infrastructure program in the U.S. is big enough to support prices for some metals, including aluminum, copper, and iron ore. The global transition to clean energy also is seen as driving demand for metals used in batteries.
The World Bank forecast sees steady but not spectacular price growth through 2030 for industrial metals and minerals including aluminum, copper, lead, nickel, tin, and zinc. In this sub-sector of metals and mining, only iron ore is projected to decline in price.
Precious and Industrial Metals
In precious metals, silver, as well as gold, is seen as declining in price through 2030, while platinum is projected to increase. Notably, platinum straddles both the decorative and industrial categories. It is used to make medical and laboratory instruments, among other products.
Industrial metals, such as copper and steel, will continue to be tied to economic growth in China and India, even with that major U.S. infrastructure program mentioned above. In fact, several of the top global mining corporations are majority-owned in China, India, or Brazil. Their influence on commodity metal and mining stock prices should be considerable.
The metals and mining sector is not dominated by U.S. companies. In fact, the world's top five all are headquartered abroad.
Long-Term Outlook for Metals and Mining Companies
Two opposing forces are at play in the mining and metals sector: resource scarcity and product innovation. Add to that the uncertainty in mid-2021 for the speed of recovery from the COVID-19 pandemic and you have a seriously difficult set of variables from which to make a prediction about the industry and its players.
These same forces compete in any natural resources marketplace. As resource deposits dwindle, costs increase, and capital needs across the industry rise accordingly.
That makes prices rise. Until, eventually, a new product, technique, technology, or consumer trend alters the metals and mining landscape. When it does, some companies will adapt better than others and will realize greater margins for their products.
Mining companies also have to contend with environmental regulations, which are likely to become more stringent in the future. Higher taxes will cause some to reduce or stop production. Some companies, countries, and regions will adapt to these circumstances better than others.
The Mining Global Market Report, released in 2021, projects the global mining market to grow from $1,641.67 billion in 2020 to $1,845.55 billion in 2021 and $2,427.85 billion in 2025.
Note that this is not an industrial sector dominated by the U.S. The global top five players are Glencore, based in Switzerland; BHP, an Australian company; Rio Tinto, headquartered in London; Vale, based in Brazil, and Jiangxi Copper, a Chinese firm.