The mining sector is cyclical but there’s good news for those keeping an eye, amid the various geopolitical conflicts, proposed tax changes and inflationary pressures.
The Lion Selection Mining Clock is pointing firmly to seven, signifying the early stages of a boom.
The well-known clock is driven by liquidity and uses the dial to signify the stages of the mining cycle. Twelve o’clock signals a crash, followed by company liquidations, declining exploration, mergers then cash takeovers as it ticks towards the start of a boom at six o’clock.
“There was a clear turning point in April 2025, when most mineral commodities and mining equities dipped to price lows before adopting a positive trajectory – this was the start of the mining boom, and marks the point where the market fundamentally changed its view on resources,” investment company Lion Selection Group said in its latest quarterly report.
The previous boom began in 2000 and that commodities super-cycle was driven by China’s rapidly growing demand.
This time around it’s different, according to Lion.
It expects commodities demand in this boom to be far less significant, given China’s growth has slowed and other large economies have mixed outlooks as they struggle with a new wave of significant inflation.
It believes this new boom will be defined by the lack of investment over the last 10-15 years, and the resulting lack of new supply to replace diminished production sources.
Many commodities are already trading towards the upper end of their price ranges, with gold hitting an all-time high in January and copper trading at record highs this month.
“This is an unusual phenomenon for early in a boom, but ultimately higher prices are required to incentivise the investment required to develop new sources of commodity supply,” Lion said.
“Commodity prices can provide a strong lead to equity markets, especially when they move to new highs, and this factor offers a strong outlook for this boom.”
Gold peaked around US$5,600 an ounce in January and the Chamber of Minerals and Energy WA has been quick to point out the benefit to the state’s bottom line from the burgeoning bullion price.
Gold royalties paid to the WA Government totalled A$519 million in FY24 before reaching $725 million in FY25, the mining body said last month, citing figures from a gold sector-specific analysis of the CMEWA’s 2024-25 economic contribution survey.
“Gold royalties are forecast to exceed $1 billion in FY26,” it added.
A boom for some and a boon for others.
The gold price has slipped from its peak to about US$4,500/oz at the time of writing but despite the volatility, Lion says the outlook for gold “remains as positive as it did in late 2025.”
Equities at the big end of town like BHP and Rio Tinto have seen share price increases of about 30% year-to-date.
Lion points out many resources companies on the ASX are exposed to gold and its volatility following the Middle Eastern conflict has created volatility for a large number of companies – and as in many times of market weakness, the smallest stocks have pulled back the most, creating a double whammy for gold explorers.
This makes opportunity pricing more attractive, Lion’s managing director Hedley Widdup noted.
Given the uncertain outlook for the Middle Eastern conflict, Lion says it’s too early to conclude this volatility has passed.
“But importantly, resources markets remain more liquid than they were in 2024 and early 2025, and there are no indications of a return to bust pricing or liquidity conditions,” Lion said. “The early stages of a boom can exhibit volatility but booms ultimately tend to last for years.”
