After a decade-long commodities boom, the outlook for mining shares is split. Among industrial metals, only copper is showing price strength; gold’s bull market, on the other hand, has skidded downward from its recent record high.

Industrial metals shares have been the biggest winners in the recent commodities boom – even bigger than energy and gold.

The price of copper, the most significant industrial metal and itself an economic barometer, moved to a new high last year. The metal’s price is now within 16% of this high, and climbing. But other Canadian metal products – aluminium, nickel, zinc and lead – have not exceeded their 2006-08 highs.

A quandary, to be sure. If copper is signalling a new bull run, potential stock market profits are big. But so is the downside.

Gold bullion prices are following a different track. They reached a high as recently as last August, and are undergoing a correction after a swift rise in 2011.

Here is where the three main resources groups stand:

– The S&P/TSX GICS diversified metals and mining index (industrial metals) rose by more than 16 times from its 1998 low to its January 2011 high. The index is now down by 23% from that high.

– The S&P/TSX GICS gold index rose by more than four times from its 2000 low to its August 2011 high. It is now off by 13% from its high.

– The S&P/TSX GICS energy index climbed by almost 12 times from its 1992 low, and more than four times from its breakout level in 2000. It is now 28% below its record high, reached in 2008.

Along the way, mind you, there was the 2008-09 market panic that destroyed portfolio gains made in the preceding four years. During that time, the metals and mining index dropped by 76%, the energy index lost 53% and the gold index fell by 49%.

Statistics Canada, in its quarterly reports on industry, views mining and quarrying as a single industry. In the 12 months ended Sept. 30, 2011 (the latest data available), StatsCan says mining revenue was $39.5 billion, 20% higher than in 2000. Revenue peaked at $47.6 billion for the 12 months ended Sept. 30, 2008.

Net income, at $9.7 billion, rose much more – it was up by 194% since 2000. Cash flow has increased by 75% to $7 billion since 2000. That said, it dropped sharply, losing 41%, in the 12 months ended Sept. 30, 2011.

StatsCan recorded no mining industry losses, which is in contrast to the S&P/TSX indices. The metals and mining index had losses in 2003-04 and again in 2009. The gold index was most recently in a loss position in 2009-10.

Mining’s return on equity, according to StatsCan, had risen to a high of 16.4% in the second quarter of 2008 from 7.4% in 2000. Its recent ROE was 10.9%.

Gold mining shares are producing greater earnings, according to the S&P/TSX indices. The latest 12-month earnings on the gold index are $6.2 billion vs $3.7 billion for the metals and minerals index. Indicated 12-month dividends on the gold index are $1.8 billion compared with $574 million for the metals and minerals index.

Gold mining index earnings have slumped, though, halving in the six months from August 2011 to February 2012. Metals and mining index earnings have gained by 23% in the same period.

But dividends from gold shares are rising, up by 26% in the same six months vs a 20% rise for the metals index. Gold shares gained by 45% in yield over the period vs a 29% increase for the metals index. The gold index now yields 1% vs 1.1% for the metals index.

Since gold bullion’s record high at US$1,896.50 an ounce last August, the spot price of gold has dropped to as low as US$1,598/oz. and was recently near US$1,660/oz. These levels are within a rising price trend dating back 12 years.

Copper made record-high prices in the US$4 per pound range in 2006-08. The weekly closing spot price on the London Metals Exchange rallied in 2010 and peaked at US$4.53 in February 2011. Copper’s recent price has been near US$3.90.

Copper’s strength contrasts with the other industrial metals. Zinc, another important Canadian product, peaked at US$2.10 a pound in 2006. The highest it has been since then is US$1.14; the recent price has been near US$0.95. Nickel peaked at US$24.27 in 2007, rallied as high as US$13.10 in 2011, and recently has been near US$8.70.

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