Big Booms and Epic Declines: 5 Experts Sum Up the Decade in Mining
As the 2010s come to an end, the curtains are falling on a decade that, all things considered, was pretty damn busy for resources.
The decade started in the immediate aftermath of the global financial crisis and saw a rash of commodities roar in popularity and price, then wither away all in the space of a few years — and the Investing News Network (INN) was there for it all.
To get a good look at the sector over the past 10 years through the eyes of the experts, INN reached out to some of the big names to ask what they thought of the decade that was.
In alphabetical order, INN spoke to Brent Cook of Exploration Insights, JuniorMiningJunky Founder David Erfle, Mercenary Geologist Mickey Fulp, Sprott’s (TSX:SII,OTC Pink:SPOXF) Rick Rule and the founder of Independent Speculator, Lobo Tiggre. Read on to find out what each expert had to say.
Question: What was the biggest story in the resource industry in the last 10 years?
Each expert gave wildly varying accounts on what they thought was the biggest story in the sector over the last 10 years, from price fluctuations to the rise of China to the “epic” bear market.
Tiggre paid tribute to the broader gold story over the last decade, but commented, “(While) the major surges and retreats that rocked gold and uranium are big and important stories … I suspect that future historians will look back onto the 20-teens as the decade the world began its shift from burning fossil fuels to the new energy paradigm.”
He believes that, as the markets realized the potential applications of more energy-dense batteries, the proliferation of lithium-ion battery technology was in hindsight a game changer.
“The energy density of the lithium-ion battery was such that it opened up vast new applications that hadn’t even been considered before, and ultimately led to Tesla (NASDAQ:TSLA) changing the automotive industry,” he explained.
Tiggre added that given that the new energy paradigm is changing how humans live and experience society, it is a bigger story than the gold spike or uranium meltdown of the last decade.
“Every child now has the sum total of human knowledge — at least in the developed world — at their fingertips,” he said.
Speaking of changes in development, the world of 2019 is a vastly different place to what it was in 2009 — and that’s in no small part thanks to the rise of China, which Cook highlighted as his choice for the biggest story impacting the resource sector over the decade.
Cook said that the East Asian superpower’s rise and industrialization pushed up commodities demand, prices and equities to all-time highs — and then lows — following the 2008 to 2009 financial crisis.
“The industry has yet to recover from that disaster,” he said.
Following on from that, Rule said that the “incredible bear market” in resource equities was easily the biggest story of the decade.
“The junior sector in particular suffered a decline — when you measure it by the Toronto Stock Exchange junior resource index — of 88 percent. “This is an absolutely epic, epic decline.”
Rule said that the fall was simply the flipside of the bull market of 2000 to 2008, however.
“I would say the most dramatic event the resource markets went through was the incredible decline in resource equities, but in particular junior resource equities … I think the silver lining in that is that bear markets are the authors of bull markets. And the bear market we’ve been through is certainly one for the record books,” he noted.
When asked about specific stories, Rule named the discoveries and developments from Canadian billionaire financier Robert Friedland in the Democratic Republic of the Congo (copper) and South Africa (platinum), even if they were “hidden in the decline.”
“The investors’ reaction to that has been muted because the copper price and the platinum price has been soft and because equities markets have been constrained. But the success exhibited by a few incredibly successful people, during an otherwise very hard decade, is something that will bear fruit for 30 or 40 years for speculators,” he said.
Fulp said that in his opinion, the biggest story of the decade was the 2011 Tōhoku earthquake and tsunami in Japan and the Fukushima disaster that followed, because of what it triggered in the uranium space and the broader commodities markets.
“It was the catalyst that killed the bull market in commodities,” said Fulp, adding that when Fukushima happened in March 2011, “metal prices were at all-time highs (and) the TSXV was just off a high of 2,440.”
“I look at it as the catalyst that precipitated the collapse of the venture exchange,” he said, pointing out that since then the TSXV has never returned to those highs. In fact, since mid-2014, the TSXV has not peaked above 1,000 points, and through 2019 wallowed between 522 and 640 points.