The increasing tendency for gold and silver to behave like safe-haven currencies instead of cyclical commodities has been a godsend for miners lately. On average, mining stocks have a higher correlation with broad stock indices like the S&P500 and FTSE than with metals prices, but when enthusiasm and demand for precious metals is at a fever pitch, as in the late 1970s to 1980, it seems that miners begin to distinguish themselves. I should note that the opposite is seems to be true at the other extreme – witness the 60% decline of the XAU Gold & Silver index from 1995-2000, while the S&P500 tripled.

Here’s a three-month view of our Base Metal Producer index vs. our Gold Producer index (you can play with more index comparisons here):

This month has not been kind to industrial resource stocks, since the broader commodity complex has been hit hard by traders anxious to unwind risk. For some perspective on how much unwinding has taken place, West Texas oil briefly traded under $80 this week, down from $114 this spring and $100 just three weeks ago:

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Dr. Copper is holding up a bit better, but is still down 14%:

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Not surprisingly, our Movers lists of best performing stocks over the past month are now dominated by precious metals companies. Here’s a snapshot, but you can see the whole list here and filter it by country or time frame:

In what has been a sideways market for most commodities, prices of titanium dioxide (TiO2 aka rutile) have doubled in private trading this year. Contracts are being settled in excess of $2500 per metric ton, up from $700 last year and $400 a few years ago. This pure white powder is favored as a color base for paints, pigments, plastics and high-quality paper, and supplies are very tight.

There are very few primary titanium producers or explorers, but two small-caps stand out in our database: White Mountain Titanium (WMTM on the OTCBB), with an advanced-stage exploration project in Chile, and Sierra Rutile (SRX on AIM), with a producing mine in Sierra Leone.

Their stock prices have reflected the situation in the rutile market, as they have defied the malaise that has effected many resource stocks lately:

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Site Tip:  To search for just companies that focus on a particular mineral, or for which a single mineral accounts for the majority of their resource value, simply select “main mineral” in the drop-down filter on the filters page:

Gold has marched steadily upwards for the last 12 months, but mining stock investors have had a more interesting ride, thrilling at first, but lately frustrating. Juniors all did spectacularly well during the summer and fall of 2010, but this year the stocks have consolidated their gains or drifted lower as gold has continued higher.

However, as gold approached the 1600 mark, miners and juniors alike have finally gotten a lift. Here is a chart of the gold price (blue), gold explorers (pink) and gold producers (green) for 2011:

It is too early to call a breakout of the downward trend, but I’ll be watching for one in the coming days. It is encouraging that the miners have continued this three week uptrend over the last few trading sessions as the broader equity indices have softened. Perhaps we are setting up for another great run once the summer doldrums are over.

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Site tip: You can compare any company to any of our indices or the gold price on the company’s charts page. Try it out with Newmont. Just select the indices you want to add to the chart from the list on the right.

It’s odd: despite gold’s steady rise from 1100 to 1500+ over the last 12 months, many gold producers are actually lower than in Spring 2010, as evidenced in our Gold Producers Index (5-year view here):

Profits are up very nicely in recent years due to leverage on the gold price, but the shares have been a big disappointment, as investors seem to be directing their enthusiasm into the metals themselves. This means that even at historically high stock prices, precious metal miners are trading at normal multiples to assets and earnings.

This makes sense if you believe that we have reached the top of this commodity cycle, because value investors know that you don’t pay premium multiples near the top (though you do near the bottom, when earnings are likely to grow). On the other hand, if you believe this bull still has legs, now is probably not a bad time to add to positions, as there seems to be a fair amount of apathy towards PM producers at the moment, so an uptick in sentiment could bring nice results.

Note that the above does not apply to gold explorers, which have done quite nicely since early 2010, though they only have been digesting that move so far in 2011.