How the mining cycle is turning
Mining cycles repeat, but knowing where you are in the cycle can make a significant difference to investment outcomes in resource stocks.
Hi, it’s Callum Newman from Marcus Today.
In this video, I want to talk about something called the Lion Selection Group (ASX: LSX) mining clock.
By way of background, back in November I wrote about the Lion Selection mining clock on the Marcus Today website. It’s a theoretical framework that describes how the mining cycle moves from boom to bust. Mining is a very cyclical industry. When it enters a boom phase, investors can do very well in resource-related stocks. When it moves into a bust phase, you need to be very careful.
This is something I’ve followed for a long time. Back in 2022, when lithium was booming and the sharemarket was very excited about battery mineral stocks, many of those companies were trading on very rich multiples. At that point, the mining clock moved into its bust phase, so I stopped recommending and investing in those stocks.
From there, the sector experienced a very large drawdown, particularly among junior miners in Australia. As a group, they fell by about 80%. Even large names like BHP (ASX: BHP) and Rio Tinto (ASX: RIO) went through a period of underperformance relative to the banking sector on the ASX.
The mining clock turns
The good news is that the clock has now ticked through the down phase. According to the team at Lion Selection Group, we are moving into the next boom period for mining.
This isn’t something I’ve just come up with recently. I’ve been writing about this idea for some time, but we’re now starting to see it play out in the market. If you follow the news, you’ll know that gold and silver had very strong years in 2025. Silver rose more than 100%, and gold also performed very well. Gold shares and precious metals stocks followed suit, which was exactly what the mining clock suggested would happen.
Gold’s strength can also be taken as a lead, or at least a potential lead, for the rest of the metals complex.
Where the opportunities may emerge
If this upswing continues, opportunities should become more widespread across commodities such as nickel, tin, copper, lead, base metals, iron ore, and even coal and natural gas as the mining upswing develops.
You may have noticed that Rio Tinto recently moved into all-time highs. BHP is up around 15% over the past six weeks or so, and junior miners are starting to lift as well. Importantly, the mining clock suggests this is not a short-lived move that flares up for a month or two and then fades away.
In theory, this type of boom can run for years. Mining has very long lead times. It takes time to find a deposit, secure approvals, obtain environmental permissions, raise capital, hire staff, build infrastructure, and eventually move into production. All of this takes years, which is why commodity booms tend to last longer than many investors expect.
That suggests there could be a lot of mining-related opportunity through 2026 and into 2027.
To keep on top of it all, start reading Marcus Today.