What you need to know: • July was the second consecutive negative month for all 17 metals in our coverage except for gold, however, mining equities largely outperformed. • As anticipated in our last Mining Monthly, the June sell-off marked a great buying opportunity in the metals equities. • We are excited by the continued outperformance in the mining sector compared to broader markets as we believe this will begin attracting generalist investors to the space. • We notice an interesting trend in the sector and highlight to readers that the equities are performing in line with their underlying metal, despite them appearing to underperform. In a true bull market, this will change. Sentiment Update The metals and mining sector was mostly down in July with all 17 metals in our coverage down except for the big one, gold. This comes as the second consecutive down month for most metals as the market consolidates the large gains made in the first five months of the year. Gold, being the most resilient metal in June, was up 5% in July bringing its YTD gains to a staggering 26%. Silver and copper were down 2% and 6% respectively. On a positive note, and as we anticipated in our June Mining Monthly note (found here), the metals and mining equities outperformed in July with the GDX, GDXJ, and SIL up a sizeable 11.8%, 9.6%, and 10.5%, respectively. Remarkably the SIL was up over 10%, despite the underlying metal being down 2%, highlighting to us the bullish investor sentiment (something we haven’t seen in years). Even copper equities (-3.1%) held up better than the metal (-5.6%). Despite the mixed month, the mining equities significantly outperformed broader markets with the TSX up 5.7% and the S&P500 up 1.3%. Again, we hope outperforming months like July continue to push the generalist investor to the sector and bring in new buying. Reflecting on the last few quarters, we are seeing an interesting trend with regard to how the mining equities are trading compared to their underlying metal; what we see is when metal prices push higher, equities lag (making the appearance that the equities are underperforming), but when the metal prices consolidate, the equities outperform (which most investors don’t pay attention to). Essentially, despite it appearing that the equities are significantly underperforming the metals, they in fact are not. YTD, the GDX, GDXJ, and SIL are all performing within a few percentage points of their underlying metal and the copper equities are outperforming the copper price by roughly double. All that said, in a true bull market, we expect the equities to significantly outperform their underlying metal prices, and we have yet to see this. Stay tuned.