Whether China can achieve liftoff with its fresh round of interest rate cuts remains to be seen, but the Australian shift can definitely be measured through an 8.3% rise in the ASX mining index over the last five trading days and a 0.3% fall in the bank-heavy all-ordinaries index.

Gold, which was first cab off the resources rank six months ago, continued its stellar run, hitting a fresh all-time high of US$2669 an ounce on Tuesday before easing slightly to US$2661/oz. It is now up US$775/oz (41%) over the last 12-months – but could go even higher.

Citi, an investment bank, reckons the “stars have aligned” for gold and silver as interest rates start to fall (in everywhere other than Australia), with a gold price in the range of US2800/oz-to-US$3000/oz expected next year. Silver this week added US$1.50/oz to US$31.89/oz

RBC Capital Markets said the latest Chinese stimulus package has a “perceived sense of urgency” about it. “We view this as positive for commodity demand and supportive of growth into the year end.”

Iron ore, which is directly exposed to any increase in construction activity in China, bounced off its Monday low of US$89.46 a tonne on the Singapore exchange to trade at US$96.30/t, taking all miners of the material with it.

BHP added $2 (5%) over the week to $42.65. Three weeks ago the world’s biggest miner was trading at $38.45. Rio Tinto did better this week with a rise of 7% to $122.37.

Fortescue surprised by underperforming its two bigger rivals, with a relatively modest share price increase of 5.5% to $18.52 despite a fresh blast of claims to be a global green mining leader through the total electrification of its mining equipment fleet at a cost of US$2.8 billion.

Mineral Resources, which had been the target of short sellers, staged a strong recovery thanks to the higher iron ore price and news that it had completed the sale of a 49% interest in its haul road linking inland iron ore deposits with the company’s port.

The $4.65.72 (12.5%) rise by MinRes to $42.35 could test some of the short sellers who might need to buy back or risk heavy losses on a strategy starting to unravel.

Those price moves by the iron ore miners form one half of the financial rotation theory, which is based on Australia’s weak, and highly politicised domestic economy, which is weighing down bank and retail stocks.

Commonwealth led the rush to the bank exit, down 6.6% this week to $134.80. Westpac was down 2.8% and National dropped by 4.8%.

But a simpler and more powerful demonstration of what might soon be called “the great funds rotation” is how the falling banks and rising miners are starting to jockey for position in the ASX pecking order.

Commonwealth Bank retained its title this week as the most valuable company listed on the ASX at $225 billion, down $16 billion on last week. BHP closed the gap with a rise of $12 billion to $216 billion – with the trend pointing to a swap at the top.

Morgan Stanley told clients yesterday that the latest round of Chinese stimulus reflected a belated attempt at stamping out economically damaging deflation which should boost the housing market and increase demand for commodities.

Critical and technology metals got an extra boost during the week with the unveiling of a “Minerals Security Partnership” to try and break China’s grip on a range of important metals such as rare earths.

Dubbed a “NATO of critical minerals” the 14-country club should see funds flowing out of manufacturing countries such as Germany, France and the U.S. into mining countries such as Australia and Canada.

Lynas Rare Earths was one of the ASX winners from the plan, rising by 56c (8%) to $7.53 while Iluka added 40c (6.3%) to $6.67.

Gold, as mentioned earlier, continued its rise albeit with uneven reaction among miners of different sizes and stages of development. The established majors steamed higher, the mid-tier miners less so while most explorers remain in the sin bin.

Northern Star (up 46c to $16.36) and Evolution (up 17c to $4.59) led the way among the majors, while Bellevue (down 1c to $1.27) and De Grey (up 3c to $1.35) underperformed.

Morgans, a local broker, described the gold sector trend as the continued “decoupling” of the gold price and gold equities, complete with a few numbers to prove the point.

“Senior producers such as Northern Star have fared favourably, underperforming the gold price index by 8%, whereas mid-cap miners such as Regis have underperformed by 30%,” Morgans said.

The gaps widens further when the performance of explorer/developers is considered, underperforming the gold price by 104%, but the booby prize belongs to African focused explorer/developers which have underperformed by 195%.

Gold news and moves this week included:

  • Spartan Resources, up 3.2c to $1.40 after releasing more encouraging assays from its near-mine Pepper deposit with a best hit of 20.61 metres at 10.02 grams of gold per tonne.
  • Delta Lithium, up 2.5c to 23c after appointing a financial adviser to review gold opportunities at its Mt Ida project in WA, with a sale considered likely.
  • Pacgold, up 1c to 11c after announcing it had raised $4.1 million to expand exploration at its Alice River gold project in North Queensland, and
  • Great Boulder, up 1c to 5.7c after reporting high grade assays up to 43.13g/t over 5m from 185m at its Mulga Bill project in WA ahead of a resource update.

Copper joined in the China stimulus rally, rising by US20c a pound to US$4.22/lb, an increase which gave Sandfire a $1 per share boost to $10.14 and 29Metals a 4c lift to 46c.

FireFly Metals attracted attention after successfully raising $65 million in an institutional placement to fund exploration work at its Green Bay project in Canada, but paid the price of issuing new shares by slipping 4c lower to 99c.

Uranium also enjoyed a modest rally, adding US$1.10 a pound to trade at US$80.45, sparking a burst of optimism from analysts who sniff a continued upward surge in the price of the nuclear fuel.

Bannerman Energy led the way up among local uranium favourites, adding 69c to $3.18 after releasing an update of its Etango project in Namibia which was used by CG Capital Markets to refresh a buy tip and price target of $4.33.

Lotus Resources released a scoping study into its Letlhakane project in Botswana, which earned the stock buy tips from Macquarie with a price forecast of 40c and from Bell Potter which also said buy but downgraded its price forecast from 70c to 50c.

Boss Energy rose by 48c to $3.31 and Global Uranium and Enrichment added 1c to 6.9c.

Lithium stocks rose with the China rally, led by Arcadium which added 19c to $3.84, perhaps on the way to Citi’s target of $6.50 or Bell Potter’s of $6.15.

Patriot Battery Metals rose by 1.5c to 39c and also scored a buy tip from Citi after a site visit to the company’s Canadian project which resulted in a price forecast of 75c.

Other news and market moves of interest this week included:

  • Develop added 13c to $2.19 after appointing GR Engineering to refurbish and upgrade the Woodlawn copper and zinc plant near Canberra.
  • Viridis Mining put on 3c to 69c after announcing the production of a maiden batch of mixed rare earth carbonate from its Colussus project in Brazil.
  • Firebird Metals received final approval for its Jinshi manganese sulphate plant in China, helping the stock rise by 2c to 13c.
  • Australian Vanadium was steady at 1.5c after receiving a letter of interest from the U.S. Government’s export/import bank, which Shaw and Partners reckons justifies a share price of 8c, and
  • Felix Gold rose by 1.1c to 10c after raising $4.8 million at 7.5c a share to help accelerate antimony production at the Scrafford mine in Alaska.