Zacks Analyst Interview Highlights: Southern Peru Copper, Natural Resource Partners and CVRD.

CHICAGO -- Zacks.com releases the latest Analyst Interview. Today's interview is with Zacks Equity Analyst Michael Schrage, who discusses Southern Peru Copper (NYSE:PCU), Natural Resource Partners (NYSE:NRP) and CVRD (NYSE:RIO).

A synopsis of today's Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.

Gold prices have remained high rather than correcting. Has your outlook on gold changed at all?

Yes, I would have to say I'm a bit more positive on gold at this point. The reaction of the markets to (Fed Chair Ben) Bernanke's comments recently that interest rates have likely stabilized. This puts more pressure on the U.S. dollar, in my view, which in turn benefits commodities, especially gold and other precious metals.

Silver has also made a big move recently. It is currently trading at $12 per ounce at this point. Historically, silver has traded at a 30 to 1 ratio to gold, but even now with a price rally to $12, silver is trading at a 50 to 1 ratio. So it looks like the silver bugs have now come out in addition to the gold bugs.

Interesting. So when you see gold prices rising so high and so fast, does that tend to pull all metals commodity prices up?

Well, I would say the industrial metals - copper, iron ore, steel, etc. - they all tend to have their own life. But when it comes to precious metals - gold, silver, platinum, palladium - there is definite trade support from gold prices. Then again, I think there is some general relationship between the prices of copper and gold. Historically, you could even make an argument for oil prices being tied to the price of precious metals.

Have any developments in the metals and mining space caused you to change your recommendations recently, such as downgrading a Buy to a Hold based on valuation?

I haven't changed any recommendations as of yet. Right now, I've still got Southern Peru Copper (NYSE:PCU) rated a Buy, Natural Resource Partners (NYSE:NRP) is a Buy and CVRD (NYSE:RIO) of Brazil is also a Buy. In fact, I've got a number of select Buys still in this space. Earnings season is not yet over, so I guess we'll see. The only company I plan to evaluate closely in terms of valuation is PCU; the others I think I'll be leaving alone for now.

What possible events might hasten a reversal in prices, in your opinion?

Definitely two things I would mention would be higher rates in the U.S. and China. If China raises its rates and lets its currency flow freely, then we might see an impact in commodities prices. The Chinese yuan is clearly undervalued right now, but letting that flow upward would slow Chinese growth. And it is this Chinese growth that has been either blamed or credited - based on your viewpoint - for the big moves we've seen in commodities prices.

Also, in terms of copper, iron ore and steel, industrial metals have clearly been affected by the extreme high levels in oil prices. The 10% growth in China is affecting the entire industry side of the globe. Gold is a little more speculative as far as this goes, in terms of where the lift in prices is coming from.

Read the full interview at http://at.zacks.com/?id=2647.

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