A Weekly Recap of All Things Resources to Friday, November 18th

‘That’s a Wrap’

By Rod Blake

Resource investors entered the new North American trading week feeling a little bit better about themselves in that for two weeks in row, their investments had outperformed the overall indexes. Gold bullion in particular acted like a beach ball being released underwater as the world’s true currency surged up by some $150 in the past seven trading days.

The way I see it – The long suffering TSX Venture Exchange has once again bumped up against the 600 level – only to be pushed back down for the second time in the past month. While this is disappointing – better days may be just over the horizon as following year-end tax loss selling – the Venture Exchange usually has a robust New Year. A break above this 600-resistance level could be a signal of much higher levels to come.

OPEC sighted mounting economic challenges including high inflation and rising interest rates in trimming its 2022 global oil demand growth forecast by 100,000 bpd to 2.55-million barrels per day.

TC Energy Corp. ‘TRP T & N’ announced its key Keystone pipeline which sends some 622,000 barrels per day of Alberta crude to the U.S Midwest – will curtail shipments by some 7^% due to recent unforeseen weather-related incidences on its system.

Meanwhile the International Energy Agency (IEA) reported that oil inventories in developed economies fell by 14.2-million barrels in September and are now at their lowest levels since 2004.

Suncor Energy Inc. ‘SU-T & N’ joined the ever-growing list of petroleum companies returning greater value to shareholders by increasing its quarterly dividend by 11^% to $0.52/share.

All of this as crude oil falls to a near 2-month low of US$80.17 per barrel.

The closely followed Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs rose by 3-rigs to 782, an increase of 219 from this time last year. In Canada – the number of active rigs rose by 1-rig to 201, an increase of 34 in the past year.

The price of lithium carbonate rose to a new all-time high of US$84,819 per tonne.

Meanwhile, Vale Canada Ltd. and General Motors Co. ‘GM-N’ jointly announced they have entered into a long-term supply agreement that will see Vale supply 25,000 metric tons of battery grade nickel sulfate to GM, starting in the second half of 2026, from its proposed plant in Bécancour, Québec.

Stelco Holdings Inc. ‘STLC-T’ shares’ rose by $4.39 or 10.88^% to $44.74 after the Hamilton, Ontario based steelmaker not only announced an increase of its quarterly dividend by 40^% to $0.42 per share, but also declared a special one-time dividend of $3.00/share.

It is said that the best place to look for gold is where the old timers first found it. Such was the case when Osisko Development Corp. ‘ODV-V & N’ reported numerous drill hole gold assays from its flagship Cariboo Gold Project in the heart of the historic Cariboo Gold Rush which included intercepts of 42.50 g/t, 33.90 g/t & 50.30 grams per tonne gold over 0.50 metres.

For the Week – the DJI was down marginally at 33,746 with the S&P 500 off by 0.70^% to 3,965 and the NASDAQ lower by 1.56^% to 11,146. Up north – the TSX fell by 0.65^% to 19.981 as the TSX Venture lost 4.17^% to an even 576. The CBOE Volatility Index or VIX rose by 2.66^% to 23.12.

With currencies – the Canadian dollar dropped by 0.78^% to US$0.7477 while the U.S. dollar ‘DXY’ gained 0.60^% to 106.93.

With commodities – Gold bullion lost 1.19^% to US$1,750 with silver down by 3.55^% to US$20.93 as copper dropped by 8.31^% to US$3.64 and lithium fell by 0.50^% to US$83,172. Crude oil lost 9.72^% to US$80.17 while natural gas gained 7.97^% to US$6.37. Lumber fell by 4.27^% to US$426 and overall – the CRB Commodities Index fell by 1.64^% to 299.

And Finally – Pension plans are supposed to invest their members’ money very conservatively so that there will always be sufficient funds available for future pensioners. But here was the Ontario Teacher’s Pension plan admitting it lost US$95-million in last week’s bankruptcy of FTX Trading cryptocurrency exchange platform. Now while the Plan says the loss is only 0.05^% of its total net assets and to them is an acceptable loss – I’m sure US$95-million is still a lot of money to the average teacher.