Issue link: http://resourceworld.uberflip.com/i/912601
26 www.resourceworld.com D E C E M B E R / J A N U A R Y 2 0 1 8 US, the negative to positive earnings pre- announcement ratio is down to 1.9x, its lowest level in six years," they wrote. "Unless the dollar trend shifts to strength in 2018, the focus for gold's next rally leg should be the stock mar- ket's potential for mean reversion… If the dollar has peaked and stock-market volatility normalizes a bit in 2018, then the US $1,400/oz handle should come into play for gold… Trading at half the price-to-value of the S&P 500, gold has good support… Investors reluctant to sell strong-momentum stocks are buy- ing more gold to diversify. Based on ETF holdings, the implication is that stocks, whether higher or lower, may favour gold prices. Greater stock-market volatil- ity usually supports gold's attribute as the primary liquid alternative asset," said Mike McGlone, commodities strategist for Bloomberg Intelligence. But what has traders and brokers most optimistic is the multi-metal market rallies that are underway that include zinc, cop- per, cobalt and nickel. Industrial metals have rallied sharply since the middle of the year. Copper is near US$7,000/tonne, zinc topped a decade high and aluminum has jumped almost 30% in the past year. For the first time in years, the outlook for global metals demand doesn't hinge solely on China. Manufacturing in the euro-area is growing at its fastest pace since at least 2014. In November 2017, the International Monetary Fund upgraded its growth outlook for the US, the Euro area, Japan and China, and said the global economy's performing at its best pace in the last 10 years. Metals demand in Europe is picking up on the back of rising demand from the construction and automotive sectors and in both the US and Asian econ- omies demand is also rising as a result of the electrification movement underway – batteries for electric cars being the present mainstay. "The economic outlook is stronger than it has been for a while across the major economies with more consistent growth in Europe, the US and China," Tipples at JPMorgan told Bloomberg recently. While strong global demand is under- pinning the optimism, supply issues are also creating pockets of tightness and opportunities in the exploration stocks. Zinc is a case in point. Because prices for zinc dropped significantly a few years back, and because its supply is widely dis- tributed among large group of producers and a tends to occur geologically alongside other metals like copper and silver, few miners were dedicated to mainlining prof- itable supply and demand in zinc. Output dipped as a response to slumping prices in 2015, and now with a robust construction market providing a boost for demand the market has run short and new sources of supply will be needed to replace existing mines. London metals exchange invento- ries touched their lowest levels in October