‘That’s a Wrap’
By Rod Blake
The Gold Bugs returned to the markets on Monday morning a little concerned that once again their favourite metal had approached but failed to break through the resistance of the last two previous highs. They wondered if this second attempt at a new high was also destined to eventually fail?
The way I see it – The Gold Bugs should look to their poor cousin silver to perhaps gain some knowledge from the past and some insight into the future. It is said that in a true precious metals bull market, silver outperforms gold. This is because silver’s dual value of both a precious and industrial metal combines to outperform gold’s singular value of a protector of wealth. When this current rally began in early March – gold improved from about US$1,820 to US$2,020 for a gain of $200 or about 11%. Meanwhile silver has gained about $5 to $25 for a gain of about 25%. On a percentage basis silver is outperforming gold. On a more interesting note – the gold/silver ratio (2,020/25) is now about 81 after being about 91 one month ago. On the 2000 rally gold touched 2080 while silver reached $30 for a gold/silver ratio of about 70, somewhat below the current ratio. The modern era average gold/silver ratio is about 65:1. How low could the ratio go? In the inflation peak of 1980 gold reached US$850 and silver reached US$40 (albeit with some help from the Hunt brothers) for a gold/silver ratio of about 21. Keep an eye on the gold/silver ratio. If the current ratio continues to drop – the precious metals rally is still on. Should it begin to rise again then the Gold Bugs will have to wait for their days in the sun at another time.
Tesla Inc. ‘TSLA-N’ announced the electric vehicle company intends to build a battery factory in Shanghai, China that will have the capacity to build 10,000 ‘Megapack’ industrial energy storage units a year that can be utilized to help stabilize energy storage grids and prevent power outages.
Tesla also announced retail price cuts to its American fleet of up to US$5,000 or 5.6% in an effort to bolster sales and keep it price competitive with other North American EV manufactures.
The U.S. environmental Protection Agency introduced new emission standards for cars and trucks that are projected to reduce air pollution and green house gases by nearly 10-billion tons of CO2 through 2055.
The price of lithium fell to a new 21/3-year low of US$28,749 per tonne.
Newcrest Mining Ltd. ‘NCM-T’ shares’ rose by $1.60 or 6.34% to $26.82 after the Melbourne, Australia miner received and enhanced A$32.87 stock & cash takeover bid from America’s Newmont Corporation ‘NEM-N’ – representing a 16% premium to the bid that Newmont offered Newcrest in February.
If one mine is good then two should be better for Minera Alamos Inc. ‘MAI-V’ as the Toronto, ON based junior gold miner announced the company had completed the documentation necessary to formally proceed with the permitting process for its Cerro de Oro gold mine in the State of Zacatecas Mexico, that when in production, will be Minera’s second gold mining operation in that country.
This as the price of gold bullion rose to a new 13-month high of US$2,040 per troy ounce.
Miners know how to take advantage of rising commodity prices and Vancouver, BC based IMPACT Silver Corp. ‘IPT-V’ took advantage of a rising silver market to increase the size of the company’s previously announced private placement financing by $1-million to $8-million.
This as the price of silver rose to a new 1-year high of US$25.81 a troy ounce.
Similarly, Glencore Plc ‘GLRN-L’ upped its bid for Teck Resources Ltd. ‘TECK.A&B-T’ & ‘TECK-N’ by including a cash component of $8.2-billion to the previously announced $22.5-billion all-stock takeover bid it had presented to Teck just one week ago.
Copper Mountain Mining Corp. ‘CMMC-T’ stock surged up by $0.41 or 18.14% to $2.67 after the Princeton, BC miner accepted a friendly $2.67 all-stock takeover offer from Toronto, ON based Hudbay Minerals Inc. ‘HBM-T & N’ that, if approved by shareholders – will form a combined entity that will be Canada’s third largest copper producer.
The influential Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 3-rigs over the past week to 748, up by 55 from this time last year. In Canada – the number of active rigs fell by 16-rigs to 111, an increase of 8 in the past year.
This as the price of crude oil rose to a new 5-month high of US$83.28 per barrel.
The U.S dollar index or DXY fell to a new 1-year low against a basket of world currencies to 100.99.
For the Week – the DJI gained 1.19% to 33,885 as the S&P 500 rose by 0.80% to 4,138 and the NASDAQ improved by 0.29% to 12,123. Across the line – the TSX gained 1.90% to 20,580 and the TSX Venture rose by 1.92% to 638. The CBOE Volatility Index or VIX fell by 7.07% to 17.10.
With currencies – the Canadian dollar rose by 0.93% to US$0.7482 while the U.S. dollar ‘DXY’ fell by 0.56% to 101.57.
With commodities – gold bullion lost 0.15% to US$2,005, while silver gained 2.13% to US$25.38, and copper rose by 2.23% to US$4.12, while lithium lost 9.01% to US$28,749. Crude oil gained 2.65% to US$82.58 and natural gas improved by 4.43% to US$2.12, while uranium was unchanged at US$50.35. With soft commodities – lumber rose by 7.80% to US$415. Overall – the CRB Commodities Index gained 1.34% to 303.
And Finally – A recent study by Oxfam found that the average billionaire emits about 3-million metric tonnes of carbon dioxide (CO2) per year into the atmosphere as opposed to the 2.76 metric tonnes of CO2 emitted by the average person in a year.