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Something of a thought experiment today, motivated by the fact that I don’t want to go through another bear market in mining. I’m done with them. The false dawns, the endless grinding declines, the frustration.

You might remember me saying, mid bear market a few years ago, “One more bull market and I’m done.”

So the question I’m asking today is, “when can we expect this bull market to end?” It might already be over, for all I know. Or there might be another five years in the tank.

I’m asking this question because I’m finding myself more and more tempted by high-risk mining exploration plays. I’m seeing value in companies that today have a market cap of C$50 million that a year ago I would have been more reluctant to invest in when their market caps were under C$10 million.

Last week I bought one. I like it. But the way I bought it ignored all the risk-aversion built up over ten years of bear market.

If we are in a secular bull trend for metals, then companies like this will do very well. But come a bear market, they will grind lower and lower, eventually reaching a point where they trade for little more than their cash value.

My broad thesis for gold and silver, as you know, is that we trade sideways for a year, while the market works through the excesses of 2025. A mid-cycle pause, so to speak, before we eventually go to the $7 to $10,000 by the end of the decade. At present I feel more bullish about base metals such as copper and zinc. Rising prices here will preserve the bull market in mining more generally.

But this is just one writers’ thesis.

The mining cycle

So today we are going to study two long-term charts.

I have got a fantastic chart of the copper price, adjusted for inflation, going all the way back to 1900. Copper is a good proxy for industrial metals and to some extent gold and silver as well. There is a lot to learn from this chart, some of it quite unexpected.

Yes, mining and mining methods have changed over the years. Grades used to be a lot higher (there were higher amounts of metal in the rock) but this is offset by improved extraction methods meaning lower grade rock is now economic. Bottom line the world is consuming more copper than ever before.

The mining cycle however still exists. Today, if anything it takes longer than ever before. If there is a shortage of supply of metal resulting in a price rise, it still takes many years and a lot of investment to increase supply from existing mines. Companies, which tend to be risk-averse, have to be persuaded for example that the higher price warrants the extra investment - that the higher price is here to stay. Once the investment is made it can take a long time to build out the mine. Then there are regulators to get past. This can take years too.

As for new mines it can take over a decade or more to take a mine from discovery to production. Making the discovery in the first place can take years too.

All the while there is a shortage of metal and prices keep on creeping up.

Eventually there will be an excess of metal and prices start falling again. Then all the mines need to be shut down. That takes time. Once they’re shut and everyone has lost their shirt, there is considerable reluctance to ever do anything again (see my opening comment)

Then the metal price starts going up again.

The world may be unrecognisable from the first half of the 20th century. The mining cycle is unchanged however.

So what do these cycles actually look like over the long term? And more importantly, where are we now?

To answer that, we need to look at two charts. One, as I say, goes back to 1900. The other is the oldest mining index there is.

One thing to keep in mind as you look at these charts: the biggest gains in mining don’t come at the end of a bull market. They come early.

The Problem with Mining Bull Markets