The commodities sector has got off to a less-than-stellar start this week as heady earnings multiples for the Footsie's drillers and diggers have come under increased scrutiny.
Fears are rising that resurgent metals and energy prices have been propelled by rampant speculation rather than signs of improvement for chronic supply/demand imbalances.
Rising jitters have caused bellwether commodity copper, for example, to slump back towards the $4,700 per tonne marker in recent sessions. The red metal has seen its value shrink 7% from late April's highs above $5,000, and further losses may well be on the cards thanks to a murky fundamental picture.
Data released at the weekend showed Chinese copper imports tanked 21% month-on-month in April, to 450,000 tonnes.
Record inbound shipments of 570,000 in March had raised hopes that China's economic cooldown may be passing, helped by fresh waves of monetary stimulus by the People's Bank of China.
But subsequent news that stocks held at Shanghai Futures Exchange warehouses hit a record 394,777 tonnes in mid-March belies suggestions that underlying commodities demand is improving.
Fit to fall?
This obviously bodes ill for recent risers such as Kaz Minerals(LSE: KAZ), a stock that has seen its share price explode by more than 75% during the past six months.
The City expects the Asia-focused producer's bottom line to bounce back in 2016 -- indeed, Kaz Minerals is expected to swing to earnings of 6 US cents per share from losses of 2 cents in 2015.
However, the recent share price ascent still leaves the digger dealing on a huge P/E rating of 37.2 times, sailing well above the benchmark of 10 times that reflects companies with high risk profiles.
Given the likelihood of further disappointing copper-related news in the weeks and months ahead, I believe this elevated earnings multiple could see Kaz Minerals' stock value collapse through the floor.
The patchy macroeconomic backdrop has boosted investor demand for 'store-of-value' assets in recent months, helping hard currency gold canter above the $1,300-per-ounce milestone last month.
But enduring weakness in physical gold demand, allied with suggestions that the US dollar has now bottomed -- a deteriorating greenback has been a major gold price driver in recent months -- indicates that precious metals prices could be about to turn lower again.
And for silver producer Fresnillo, concerns that industrial demand for silver is also likely to remain sluggish this year and beyond casts additional concerns over the scale of recent share price advances.
Indeed, the Mexican miner is currently dealing on a P/E rating of 54.7 times for 2016. And while Acacia Mining deals on a much-better multiple of 19.6 times, I reckon this also leaves plenty of room for an eye-watering share price fall.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.