The world could be in the early stages of a commodities supercycle that will blow current highs out of the water. Or it might not be. It depends who you ask. Even if we don’t conclusively answer the supercycle question – nuance is both a tool for canny investing and the killer of strong narratives – there are ways to profit from commodity markets in the next years and beyond through studying why some think a new metals boom is here.
Growth on top of current metals prices would see mining company earnings explode. The commodities that have hit decade-long highs or record highs in the past two years include gold, copper, iron ore, silver, palladium, rhodium, and more. An industrial boom beyond the Covid-19 recovery could push these higher. Mining investors have already had a taste of this, and BHP (BHP) and Rio Tinto (RIO) are already easily outperforming most of the FTSE 100.
Rio has a forward dividend yield of 10.1 per cent, BHP’s is 7.6 per cent, compared with the FTSE 100 average of 3.8 per cent, and their total returns have surged already.