(MENAFN- ProactiveInvestors) Diamonds have again been tipped to outshine an otherwise gloomy mining sector in 2015.
Prices in most base metals as well as iron ore and coal have declined in January adding to last year’s falls.
This has knocked investment in commodities as an asset class.
Shares in nearly all mining equities with the notable exception of precious metal companies are down this month.
Given the uncertain outlook for the mining community South African broker ’s preferred exposure is to the diamond market.
The broker has downgraded forward earnings of most commodity producers as a result of the price declines but the exceptions are precious stone producers () and emerald ruby and sapphire miner ().
Petra is the standout mid-cap miner according to analyst Marc Elliot and is on the cusp of returning cash to shareholders.
meanwhile is one of the most exciting stories in the mining sector today he says.
In broad terms Elliot says the diamond industry has been under-invested for a number of years and now faces rapidly rising demand from China and India due to growth in the urbanised middle classes.
“Compelling fundamentals should result in upward price pressure for rough diamonds” he adds.
When it comes to gold ’s mining team says the precious metal presents a conundrum for investors.
A strengthening US dollar it says and the prospects of higher interest rates in the US present significant challenges to the medium term investment case.
However a multitude of global political risks has seen more investors turning to the safe-haven asset boosting its price in the short term.
“Of the London listed gold equities our preferred stock is Acacia Mining” said analyst Hunter Hillcoat.
“2014 was more than just a name change for the company formerly known as African Barrick with Acacia being justifiably re-rated by the market
“It is now a company that offers the potential for meaningful growth at attractive costs.”
Elsewhere expects a further fall in the price of copper.
Supply has continued to outstrip demand and prices fell to six year lows at below US$6000 a tonne last week.
Still the broker says a further modest deterioration in supply/demand is likely.
This it says limits the upside potential of blue chip Antofagasta ().
It still rates () as a ‘buy’ nonetheless as it ramps up production.
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