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‘That’s a Wrap’

By Rod Blake

As the five North American markets I follow head into yearend 2023, their performance scorecards look something like this – The Dow 30 (37,507) at an all-time high, The S&P 500 (4.719) and NASDAQ (14,814) are near or at 2-year highs, The TSX Composite (20,529) is at a 10-month high, and the TSX Venture Exchange (531) is near the 31/2-year low of 507 set in November. Clearly, the big cap American markets were once again the big winners, with the TSX Composite somewhat behind but only a few points below an 11/2-year high, while the beleaguered Venture the clear loser.

The way I see it – The great comedian Rodney Dangerfield often referred his to his life as one of “No Respect”, and I think the same could be said of the lowly TSX Venture Exchange. Granted, the Venture doesn’t contain the big name companies that power the world’s economies, it does hold the companies that explore and find the minerals needed to power the world’s economies. And at a time when those in the know say the time line for the world to electrify is very short, I find it amazing that there is such a lack of interest in these companies, with many trading at or near all-time lows. But, all is not negative on the junior resource markets. The world is figuring out that uranium is going to play a significant part in achieving a greener environment and, following years of no interest, has bid up yellowcake to a 16-year high of US$82 and some junior uranium stocks to multi-year or all-time highs. Plus, after 31/2-years of trying, gold bullion recently broke through to a new all-time closing high of US$2,072. This milestone has yet to filter down to the precious metal juniors but should do so in the New Year. It probably will take more minerals to reach new highs or perhaps a shortage or even a crisis to draw some of that big cap money down to the Venture. Uranium and gold are gradually getting some attention. Should other minerals follow suit then the big money will come and the ‘No Respect’ Venture Exchange may earn a lot more respect in 2024.

No sooner had the above ‘crisis’ comments touched this page, then the price of crude oil surged up by almost $3 to US$74.30 a barrel after BP plc ‘BP-N’ announced the petroleum giant would curtail shipping through the Red Sea due to the threat of attacks by Houthi militants in the Yemen region.

Plus, things got a little uncertain in the Organization of the Petroleum Exporting Countries (OPEC) after Angola announced the 1.1-million barrel per day (mmb/d) producer was withdrawing from the 13-member cartel in protest over mandated production cuts.

The Canada Growth Fund announced it will invest $200-million to purchase up to 185,000 tonnes of carbon credits from Calgary, AB based emissions reducing technology company Entropy Inc. over a 15-year time frame at an initial price of of $86.50 per tonne (pt).

This as the key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 3-rigs over the past week to 620, down by 159 rigs from this time last year. Across the line – the number of Canadian active rigs dropped by 39-rigs to 146, up by 50-rigs from one year ago.

The price of uranium continued its bull run – rising to a new 16-year high of US$86.35 a pound.

Which no doubt helped the price of Energy Fuels Inc. ‘EFR-T’ & ‘UUUU-N’ stock to rise by $0.76 or 8.17% to $10.06 after the Lakewood, CO miner announced the company had commenced production at three uranium properties in Arizona and Utah, and was also preparing two other uranium projects in Colorado and Wyoming for production within the next year. EFR expects the run-rate for the Pinyon Plain, La Sal and Pandora mines to be 1.1 to 1.4-million pounds of U3O8 a year.

Units of Sprott Physical Uranium Trust ‘U.UN-T’ rose to a new 15-year closing high of $27.85.

The previous week’s bullish sentiment continued into the current week as the TSX Composite stayed on its path to new 12/3 high close of 20,881, the S&P 500 and NASDAQ improved on their 2-year closing highs reaching 4,768 and 15,003 respectively, and the DOW 30 continued its climb to a  new all-time closing high of 37,558.

Gold stocks found some joy with the price of Barrick Gold Corp. ‘ABX-T’ & ‘GOLD-N’ closing at  new 7-month high of $24.12, while Kinross Gold Corp. ‘K-T’ & ‘KGC-N’ reached a new 2-year closing high of $8.24.

Meanwhile, IAMGOLD Corp. ‘IMG-T’ & ‘IAG-N’ shares’ rose by $0.17 or 4.99% to $3.58 after the Toronto, ON based miner released an enhanced technical report for the company’s Essakane Gold Mine in Burkina Faso.

And Skeena Resources Ltd. ‘SKE-T & N’ stock rose by $0.395 or 6.52% to $6.36 after the Vancouver, BC based mineral developer announced the closing of an $81-million royalty and convertible debenture financing. The funds raised will help with the progress of Skeena’s Eskay Creek and Snip Projects in North-West British Columbia’s Golden Triangle.

Sighting – “We are at a tipping point” – the Canadian federal government introduced its Electric Vehicle Availability Standard that will require zero-emission vehicles to make up 20% of new car sale in 2026, 60% of sales in 2030 and 100% of sales in 2035.

Funds also flowed into the copper sector, and shareholders’ of Vancouver, BC based copper miner Taseko Mines Ltd. ‘TKO-T’ & ‘TGB-N.A’ saw their investment rise to a new 3-month closing high of $1.93, while Toronto’s HudBay Minerals Inc. ‘HBM-T & N’ stock closed at a new 4-month high of $7.49.

It is said in the mining industry that “The opening of every new mine is one day closer to its closing”. So it is for the Myra Falls Mine located southwest of Campbell River on British Columbia’s Vancouver Island, after Trafigura Mining Group said the zinc, lead and copper mine would immediately close due to economics after some 57 odd years of operation. Of note – My first job after graduating from the BC Institute of Technology (BCIT) in 1971 was as an underground mine surveyor at Myra Falls.

The price of lithium fell to a new 21/3-year low of US$13,483 a tonne.

Lumber rose to a new 5-month high of US$561 a thousand board feet (mbf).

Which helped lumber stocks like Vancouver, BC based Canfor Corporation ‘CFP-T’ to reach a new 3-month high closing price of $18.15, and the price of Vancouver, BC based Doman Building Materials Group Ltd. ‘DBM-T’ shares’ to close at a new 13/4-year high of $8.40.

The Canadian dollar rose to reach a new 4-month high of US$0.7539.

While the U.S Dollar Index or ‘DXY’ dropped to a new 5-month low of 101.70.

Natural gas and uranium led commodities higher on the week, while lithium was the greatest drag.

All of the five North American markets I follow enjoyed a Santa Clause rally going into the Christmas long weekend.

For the Week – the DJI gained 0.22% to 37,386 with the S&P 500 up 0.76% to 4,755 and the NASDAQ ahead by 1.21% to 14,993. In Canadathe TSX gained 1.71% to 20,881 and the TSX Venture rose 4.90% to 557. The CBOE Volatility Index or VIX gained 5.76% to 13.03.

With currencies – the Canadian dollar rose by 0.84% to US$0.7537 while the U.S. dollar ‘DXY’ fell 0.88% to 101.70. 

With commodities – gold bullion gained 1.68% to US$2,053, as silver rose 1.34% to US$24.17, and copper gained 0.78% to US$3.90, while lithium lost 1.32% to US$13,483. Crude oil gained 2.54% to US$73.41 as natural gas rose 5.26% to US$2.60, and uranium gained 4.92% to US$86.35. With soft commodities – lumber rose 3.15% to US$557. Overall – the CRB Commodities Index gained 3.40% to 304.

One Last Thought – Christmas and the Holiday Season is upon us, and the markets will probably be very quiet and hopefully uneventful next week. I’ll be travelling to Princeton for a few days so this will be my last report for 2023. I’d like to thank Resource World for giving me a platform this past year to publish my observations and I hope their many subscribers may have found them somewhat insightful as well. If all goes well this column will reappear in early January. Until then, I wish everyone a very Merry Christmas, a wonderful Holiday Season and a most Happy New Year!

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