A Weekly Recap of All Things Resources to Friday, January 17th, 2025

‘That’s a Wrap’

By Rod Blake

The new trading week began with big cap passive or index investors pouring over their notes to see what had gone wrong with the generally accepted game plan for investment success. They had been told to buy the index and just sit back and let the Fed do its job. U.S. interest rates were to retreat steadily back to the 2% range and the equity markets would respond by building upon the 20% plus annual gains of the past 2-years and climb to more and more all-time highs. Easy peasy – buy, hold and forget about it investing. All is good – until it isn’t.

The way I see it – In over 30 some years of being an independent broker, one learns that if the majority of the market is over weighted on one side of the street, then one might be advised that the best place for success might just be on the other side. For over a year and just up until recently – most market gurus were almost guaranteeing that US interest rates were going back down to the 2% range and that inflation will be tamed once again. But here we are in the first part of 2025 and U.S. interest rates are much closer to 5% than to the targeted 2%. This has resulted in the U.S. dollar Index ‘DXY-N’ at near 23-year highs. A strong U.S. dollar is usually never good for commodity prices which are traded in such. Except that many commodities such as gold and silver holding their own while others such as copper, crude oil and natural gas are even a bit higher on the year to date. A little weaker U.S. dollar could go a long way to jump start these commodities and their underlying equities. Most of the mainstream market pundits seem to be favouring the overextended big cap side of the street, while a shrewd few contrarian investors are on the other.

After handing out rebates of up to $5,000 for more than 546,000 new light-duty electric vehicles (EVs) since 2019 – Ottawa has cut off further light-duty EV subsidies as the funds allotted to the program have run out 2½-months early. The successful program is scheduled restart with smaller rebates in April.

Sometimes it’s confusing how the market reacts to news releases. Case in point – the share price of American Eagle Gold Corp. ‘AE-V’ plunged lower by $0.15 or 25.00% to $0.50 in spite of the Toronto, ON based explorer reporting its drill hole NAK24-31 from the company’s NAK Project in central British Columbia returned 0.78% copper equivalent (CuEq) over 407 metres (m).

This as the price of copper reached a new 2-month closing high of US$4.41 a pound (lb).

Mining is a risky business. As such – Barrick Gold Corp. ‘ABX-T’ & ‘GOLD-N’ shut down its Loulo-Gounkoto mining complex after the government of Mali seized the mine’s recovered gold in an ongoing royalty dispute, and to rub salt into the wound – also issued an arrest warrant for Barrick’s president and CEO Mark Bristow.

Meanwhile, investors of B2Gold Corp. ‘BTO-T’ & ’BTG-N.A’ – also with operations in Mali – saw their investment fall by $0.18 or 4.99% to close at a new 4-month low of $3.43 after the Vancouver, BC based miner cut the quarterly dividend of its underperforming stock in half to $0.02 a common share.

Skeena Resources Ltd. ‘SKE-T & N’ shares’ rose by $0.42 or 3.18% to close at $13.64 after the Vancouver, BC based mineral developer announced the discovery of an as yet unnamed new Gold-Copper Porphyry system at the company’s KSP Property in the Golden Triangle region of British Columbia.

Pan American Silver Corp. ‘PAAS-T & N’ stock gained $0.49 or 1.61% to close at $30.89 after the Vancouver, BC based miner achieved its production guidance for 2024.

Crude oil rose to close at a new 5-month high of US$80.34 a barrel (bbl).

And natural gas reached a new 2-year closing high of US$4.28 per million British thermal units (MMBtu).

Suncor Energy Inc. ‘SU-T & N’ closed at a new 2-month high of $57.50.

Meanwhile, the key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 4-rigs over the week to 580, down by 40-rigs from this time last year. Up north – the number of Canadian active rigs rose by 13-rigs during the week to 229, up by 6-rigs from one year ago.  

Utility issues caught a bid with –

Enbridge Inc. ‘ENB-T & N’ shares’ rising to a new 10-year closing high of $64.38.

And TransAlta Corporation ‘TA-T’ & ‘TAC-N’ closed at a new 13-year high of $20.68.

Nickel climbed to a new 1-month closing high of US$7.31 a pound (lb).

Lithium rose to a new 1½–month closing high of US$10,600 a tonne (t).

Lumber rose to close at a new 2-month high of US$600 per 1,000 board feet. (MBF).

The CRB Commodities Index rose to close at a new 16½–year high of 376.

The Canadian Loonie fell to a new 9-year closing low of US$0.6906.

Lumber and lithium lead commodities higher over the week while natural gas and silver were the biggest drag.

After an uncertain start to the week – all of the North American equity markets rallied into the weekend.

For the Week – the DJI gained 3.70% to 43,488, with the S&P 500 up 2.92% to 5,997, and the NASDAQ ahead 2.44% to 19,630. Across the line – the TSX gained 1.21% to 25,068 and the TSX Venture rose 1.32% to 616. The CBOE Volatility Index or VIX fell 18.60% to 15.97.

With currencies – the Canadian dollar lost 0.36% to US$0.6906, while the U.S. dollar Index ‘DXY’ gained 0.43% to 109.39. 

With commodities – gold bullion rose 0.37% to US$2,702, while silver lost 0.23% to US$30.33, as copper rose 1.41% to US$4.32, and lithium gained 3.08% to US$10,600. Crude oil gained 1.75% to US$78.01, while natural gas lost 1.75% to US$3.92, as uranium rose 0.82% to US$73.80. With soft commodities – lumber rose 7.41% to US$594.

Overall – the CRB Commodities Index rose 3.59% to 375.