A diamond in the rough.

Over the last year, the average prices of stocks and shares have fallen by 40%. The commodities market has seen an erratic increase of up to 60% followed by a recent fall to -20%. For the long term investor, this has been a disastrous time, for the speculator, it has provided fantastic opportunities. One of the hardest hit sectors in recent months has been Mining industry. Affected by the general fall in share prices and by the recent fall in metal prices, mining stocks are at an all time low as investors have over-sold in an attempt to minimize losses. The question is, are mining stocks now cheap, and do they present a realistic investment for a short to mid term gain? One of the main factors for the recent fall in metal prices has been a reduction in demand by China. Although China's growth has been consistent over the last decade, they are still reliant on exports to Europe & the US and the economic slowdown has created a knock-on-effect. The price of most non-ferrous commodities has dropped by around 25% after hitting all time highs 6 months ago. Whether mining stocks are now a good investment or not would appear to hinge on two main variables. Will the price of metal commodities rise due to increased demand from other developing countries such as India & South America, despite the economic slow down? Will the economic slowdown halt before a recession sets in & reverse the fortunes of the stock market? Should there be a positive outcome to either or both of these scenarios, then mining stocks do present themselves as a potentially solid investment and should be considered high on the list of present investment opportunities.