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‘That’s a Wrap’

By Rod Blake

Just as those who held U.S. market funds were very pleased with last week’s 2-year closing highs, there was one group of very disappointed investors – the Gold Bugs. Disappointed and frustrated as for the second time in less than three years, investors of the yellow metal had witnessed their prized holding spike up to a new all-time high only to plunge back down a mere few days later.

The way I see it Head faked. That’s what I saw. Once again, the gold bugs were head faked. For those who may not follow sports – a head fake is when an opponent moves their head one way and then quickly shifts their body the other way. A move that usually leaves the defender going the way of the head and the opponent going the other. On the playing surface, this can leave the defender wondering what just happened, while the same move in the markets can leave investors feeling much the same. When gold spiked up two Friday’s ago to a new all-time close of US$2,072 the gold bugs were ecstatic as their cherished metal had finally reached the new pinnacle they had all been predicting would come. And when gold traded above US$2,100 over the weekend the “We Told You” so chants were heard far and wide. But then, as in 2020, gold gave its followers another head fake and plunged lower in just one day, couldn’t recover, and finished last week at US$2,003, leaving gold bugs once again standing alone with their frustration. But, gold investors should take heart in that ‘Three Times may be Lucky’. Two times now, gold has failed to hold on to new all-time highs. But gold is still up some 5% on the year and the customary New Year’s strong season for gold is just ahead. Don’t be surprised if sometime in early 2024 gold once again takes a run at US$2,100 and this time blows right through and holds. The sound you hear will be the gold bugs letting you know when it happens.

Barrick Gold Corp. ‘ABX-T & N’ announced the Toronto, ON based miner would restart its Porgera Gold Mine in Pagua New Guinea, and that the US Bureau of Land Management had issued a Record of Decision (ROD) approving the plan of operations for Barrick and Newmont Corporation ‘NEM-N’ joint ventured Goldrush underground goldmine near Beowawe, Nevada.

Stratabound Minerals Corp. ‘SB-V’ shares surged up by $0.01 or 50.00% to $0.03 on heavy volume after the beleaguered Toronto, ON based junior explorer announced the discovery of a new Reduced Intrusion-Related Gold System (RIRGS) at the company’s Win Gold Project in the southern Tombstone Belt, Yukon.

Senior gold producer Kinross Gold Corp. ‘K-T’ & ‘KGC-N’ closed at a new 2-year high of $8.21.

And the price of I-80 Gold Corp. ‘IAU-T’ & ‘IAUX-N’ rose by $0.18 or 7.83% to $2.30 after the junior miner reported exceptional underground diamond drill gold assays from the Reno, NV based company’s Granite Creek Property in Humboldt County, Nevada that included 31.1 grams per tonne gold (g/t Au) over 21.9 metres (m). For you old-timers – 31.1 grams is precisely one troy ounce.

Bullish sentiment returned about mid-week to the markets after the U.S. Fed hinted that the high for interest rates might have been met. These comments helped the TSX Composite to close at a new 10-month high of 20,779. The American markets faired even better as the S&P 500 and NASDAQ all reaching new respective 2-year closing highs of 4,720 and 14,761, while the Dow 30 closed at a new record high of 37,248.

The U.S. dollar Index DXY fell to a new 41/2-month low of 101.96 while the Canadian Loonie rose to a new 4-month high of US$0.7458.

All of this goodwill helped to pull the CBOE Volatility (Fear) Index or VIX down to a new 6-year low of 12.07. Meanwhile, the CBOE Commodity Index fell to a new 5-month low of 294.

SECURE Energy Services Inc. ‘SES-T’ stock rose by $0.80 or 10.17% to close at $8.67 after the Calgary, AB based waste management and energy infrastructure company announced the sale of 30 court ordered energy waste treatment and disposal facilities to Toronto, ON based Waste Connections Inc. ‘WCN-T & N’ for an all-cash purchase price of some $1.15-billion.

Occidental Petroleum Corp. ‘OXY-N’ shares rose by $0.59 or 1.04% to US$57.06 when the Houston, TX based energy company announced the acquisition of CrownRock L.P. and its prized Permian Basin petroleum ground in a cash, equity and debt deal of some US$12.0-billion.

Vermilion Energy Inc. ‘VET-T & N’ shareholders were pleased to see their investment rise by $0.92 or 6.24% to $15.66 after the Calgary, AB based company released a positive operating budget for 2024 and better yet – increased its quarterly dividend by 20% to $0.12 a share.

The Trans Mountain Expansion Pipeline warned the Canadian Energy Regulator of a “catastrophic2-year delay in completing this important pipeline if it does not allow the company to divert a 2.3 km section of the pipe between Hope and Chilliwack, BC due to very unstable tunneling conditions.

And, as the COP28 climate conference wound down the Canadian government introduced new proposed regulations for the oil & gas industry to cut methane emissions by at least 75% from 2012 levels by 2030.

This as the price of natural gas fell to a new 6-month low of US$2.28 per million British Thermal Units (MMBTUs) and the price of crude oil fell to a new 51/2-month low of US$68.68.

The closely followed Baker Hughes Petroleum Rig Count was unavailable this week. Last week BH reported the number of active American drilling rigs rose by 1-rig over the past week to 626, down by 154 rigs from this time last year. In Canada – the number of active rigs rose by 2-rigs to 194, down by 8-rigs from one year ago.

The bear market for Lithium continued with the key electrification metal falling to another 21/3-low of US$13,663 a tonne.

Which no doubt helped the share price of Lithium Americas Corp. ‘LAC-T & N’ to close at a new 2-month low of $7.92 and Standard Lithium Ltd. ‘SLI-V’ fall to a new 22/3-year closing low of $2.43.

This as Ford Motor Co. ‘F-N’ announced the Dearborn, MI based automaker would cut production of its Lightning pickup truck in half next year, from 3,200 to 1,600 units a week to match waning customer demand.

Meanwhile, Rivian Automotive Inc. ‘RIVN-Q’ announced the electric vehicle (EV) manufacturer would begin selling fleet EVs to AT&T Inc. ‘T-N’ next year as the utility company proceeds on its plans to become carbon neutral by 2035.

Investors continued to react to the government of Panama’s decision to shut down the Cobre Panama copper/gold mine  by pushing the price of mine operator First Quantum Minerals Ltd. ‘FM-T’ down to another 31/2-year closing low of $9.65 and mine financer Franco-Nevada Corp. ‘FNV-T & N’ stock to another 23/4-year closing low of $141.10.

The money flowed to other copper producers with the price of HudBay Minerals Inc. ‘HBM-T & N’ shares’ rising to a new 4-month high of $7.24.

The stealth bull in uranium continued with the price of U3O8 rising another $0.85 to a new 16-year high of US$82.30 a pound. Fission Uranium Corp. ‘FCU-T’ hitting a new 2-year closing high of $1.16, the Sprott Physical Uranium Trust ‘U.UN-T’ reaching a new 16-year closing high of $27.68 while NexGen Energy Ltd. ‘NXE-T & N’ and Cameco Corp. ‘CCO-T’ & ‘CCJ-N’ closed at respective new all-time highs of $9.35 and $62.42.

With a move that will no doubt have some serious repercussions to the mineral industry – Argentina announced it will devalue the county’s currency by over 50%from 365 to 800 pesos to the U.S. dollar.

Silver and lumber led commodities with the greatest gains on the week, while natural gas and lithium were down the most.

Two of the major American markets improved on their mid-week gains going into the weekend with the NASDAQ reaching a new respective 2-year closing high of 14,814 while the Dow 30 ended the week at a new all-time high of 37,305.

For the Week – the DJI gained 2.92% to 37,305 with the S&P 500 up 2.50% to 4,719 and the NASDAQ ahead by 2.85% to 14,814. Across the linethe TSX gained 0.97% to 20,529 while the TSX Venture fell 1.30% to 531. The CBOE Volatility Index or VIX fell 0.65% to 12.32.

With currencies – the Canadian dollar rose by 1.54% to US$0.7474 while the U.S. dollar ‘DXY’ fell 1.34% to 102.60.                        

With commodities – gold bullion gained 0.80% to US$2,019, and silver rose 3.70% to US$23.85, as copper gained 1.04% to US$3.87, while lithium lost 0.30% to US$13,663. Crude oil gained 0.59% to US$71.59 while natural gas fell 3.14% to US$2.47, and uranium gained 1.04% to US$82.30. With soft commodities – lumber rose 1.89% to US$540. Overall – the CRB Commodities Index lost 1.67% to 294.

And Finally – The Canadian Federal Court of Appeal has ruled that 15 Canadian youths deserve a trial to determine if Canada has failed them under the country’s Charter of Rights and Freedoms’ constitutional obligations to protect their rights to life, liberty and security in light of current climate change.

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