A Weekly Recap of All Things Resources to Friday, April 21st
‘That’s a Wrap’
By Rod Blake
As the brokers, investors and portfolio managers settled in for start of the new week in the markets, there seemed to be a sense of complacency in that for the first time in many months the stars seemed to be aligned for better markets to come. After all – all of the North American markets were rising in unison, the VIX was all the way back down to levels last seen before interest rates started to rise over one year ago, most resource prices were improving and except for what now looks to be a minor bank crisis, the overall economy was in very good condition. What was not to like?
The way I see it – The stock market tends to look about 8-months into the future so this market has fast forwarded to early 2024 and is assuming that all of troubles of rising inflation and interest rates and a recession are all but behind us. That’s quite the assumption. Most market pundits are calling for a drop in interest rates later this year and only a minor recession if any even though the central banks have indicated no such thing. Will they be right in laying out an economic plan ahead of the U.S. Fed and other central bankers. I’m reminded of a great line from the movie ‘Moneyball’ where Oakland A’s general manager Billy Beane (Brad Pitt) confronts his scouts who were touting a sure thing rookie by stating “You don’t know”. My thoughts? As a broker, I had my head handed to me on many occasions when I assumed everything was going my way. I know from personal experience that when one has a setback one tries to get whole again as soon as possible. The markets look to be improving, and may return to last year’s highs. But let’s not mortgage the farm just quite yet. There is still a lot of 2023 left to play out ahead.
This as the CBOE Volatility Index or VIX fell to a new 11/2-year low of 16.46.
According to Elements by Visual Capitalist – The world’s central banks bought a record 1,136 tonnes of gold bullion in 2022.
The board of Kelowna, BC based Goldcliff Resource Corp. ‘GCN-V’ was sufficiently encouraged by the rising price of silver to launch a review and update the potential of the junior explorer’s three (Rand, Ainsworth and Kettle Valley) silver dominate properties.
Cameco Corp. ‘CCO-T’ & ‘CCJ-N’ announced the Canadian uranium giant had signed a 10-year nuclear fuel supply agreement with the Republic of Bulgaria.
The Energy Transition Spotlight reported that consumer purchases of electric vehicles (EVs) grew by 27% in March over the same month one year ago to of 1.1-million units.
Meanwhile – The Canadian Government confirmed it will subsidise Volkswagen’s previously announced battery gigafactory in Southwestern Ontario to the tune of some $13-billion over the next 10-years.
Sigma Lithium Corp. ‘SGML-T&Q’ reported the Vancouver, BC based company had transitioned from a mineral developer to producer by achieving first production of Green Lithium at the company’s Grota do Cirilo project in Brazil.
Confused or frustrated shareholders of EV pioneer Tesla Inc. ‘TSLA-N’ sold the company’s stock down by $17.60 or 9.75% to US$162.99 after the Austin, Texas based automaker announced its second 5% price cut in a month and sixth price cut for the year to date – only to increase the price of some models just 2-days later.
Meanwhile – Chile President Gabriel Boric – citing a need in boosting the economy and protecting the environment – announced the South American country would copy its copper industry and nationalize the nation’s lithium industry which hosts the world’s second largest reserves of lithium.
This as the price of lithium fell to a new 11/2-year low of US$25,735 per tonne.
Germany officially ended over 60-years of nuclear power by decommissioning the country’s last three nuclear reactors, and thereby focusing the European economic giant’s plan to transition to fully renewable power by 2035.
The price of Teck Resources Ltd. ‘TECK.B-T’ & TECK-N’ stock rose by another $4.72 or 7.81% to $65.15 as the Canada’s largest mining company and Switzerland’s behemoth Glencore Plc ‘GLEN-L’ played ‘Tit-for-Tat’ over the best way to maximize Teck’s value.
This as the International Energy Agency (IEA) estimates that due to higher Chinese consumption – the world’s oil demand will grow by 2-million barrels per day (bpd) in 2023 to a record 101.9-million bpd.
This as the Commodity Research Bureau (CRB) Commodities Index rose to a new 5-month high of 307.
Tourmaline Oil Corp. ‘TOU-T’ and Clean Energy Fuels Corp. ‘CLNE-Q’ announced a 50/50 joint venture of some $70-million that will see the two natural gas producers build and operate a network of up to twenty compressed natural gas (CNG) stations along key highway corridors across Western Canada.
The key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs increased by 5-rigs over the past week to 753, up by 58 from this time last year. Up north – the number of Canadian active rigs fell by 6-rigs to 105, an increase of 4 in the past year.
For the Week – the DJI lost 0.22% to 33,809 as the S&P 500 fell by 0.10% to 4,134 and the NASDAQ lost 0.42% to 12,072. In Canada – the TSX gained 0.55% to 20,693 while the TSX Venture lost 3.77% to 614. The CBOE Volatility Index or VIX fell by 1.99% to 16.76.
With currencies – the Canadian dollar fell by 1.28% to US$0.73.86 while the U.S. dollar ‘DXY’ gained 0.13% to 101.70.                      Â
With commodities – gold bullion lost 1.15% to US$1,982, with silver down by 1.34% to US$25.04, as copper lost 3.40% to US$3.98, and lithium fell by 10.48% to US$25,735. Crude oil lost 5.59% to US$77.96 while natural gas gained 5.19% to US$2.23, and uranium rose by 1.29% to US$51.00. With soft commodities – lumber fell by 5.78% to US$391. Overall – the CRB Commodities Index lost1.65% to 298.
And Finally – With an uncanny similarity to the 1990 movie ‘Goodfellas’ – some $20-million in gold and other valuables mysteriously disappeared from an Air Canada facility near Toronto’s Pearson airport.