We may be seeing a shift in market sentiment away from mining towards energy. Both have had good runs lately, but there's an important difference between them which may tilt the field in favor of energy over the next few years. If you have a metal shortage, the market responds by producing more metal. Substitution doesn't play a big role. Not so in energy. We have all kinds of responses to oil supply tightness and impending shortage - everything from wind to solar to geothermal, shale gas, biofuels, and so forth.

Some of these are hare-brained, some make sense. If we have persistent high energy prices, which I believe we will for the next few years, that will act as both a drag on mining, where energy is the number one cost, and a driver in the search for energy alternatives. Not only will new supply be developed, but energy producing and conserving innovations as well.

Seems to me that money may start to shift focus here. Of course you'll always have dyed in the wool mining investors, mostly in the PM sector, but trend followers (like myself) may start to refocus. Already I'm at 50% allocation to energy and looking to increase. To do that I have to sell mining stocks, so I'm looking not only at what to sell, but whether or not to commit new capital to the sector, or wait until my thesis proves out. If the trend I'm imagining does in fact emerge, that's probably where the new money will go.

We can get by with fewer "things" (many of which are useless distractions anyway) but we can't get by without energy. There's not nearly as much elasticity in that market as there is with metals, which is another point in favor of my thesis.

ebear