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‘That’s a Wrap’

By Rod Blake

As the brokers, investors, traders and portfolio managers closed down their terminals last Friday, most had a sense of relief and amazement in that in just one month, the senior North American markets had once again managed to climb out of a very big hole to the point where the U.S markets were flirting with all-time highs. Still others had a ‘What, Me Worry?’ attitude in that, save for the TSX Venture Exchange, the North American markets looked poised to exit 2023 with reasonable gains.

The way I see it – Unfortunately, as good as the above market stats are, they don’t relate to the resource markets, and the primary focus of this column, as witnessed by the beleaguered TSX Venture Exchange where, except for a few uranium issues, most resource stocks are lagging the general market. But, everyone likes an underdog, and with the price of gold bullion (US$2,072) now reaching  record highs in all currencies, this should attract an increased level of interest to the above mentioned TSX Venture Exchange which, is still down almost 6% on the year. If the current gold rally holds, and perhaps silver continues to outperform gold, then, there could be quite the run to the finish of 2023.

Last week’s record high close for gold finally gave the gold bugs their long-awaited reason to celebrate. And party they did, right through the weekend where early Monday morning European quotes had the yellow metal briefly above US$2,100. But, as most know – too much partying can lead to major hangovers. As a result, the gold bugs got a big hangover as just 2-days after hitting a new all-time high, gold bullion fell by $43 or 2.03% on Monday to close at US$2,029. And just to make the hangover worse – the price of silver fell by $1.00 or 3.65% to close at US$24.48.

Impact Silver Corp. ‘IPT-V’ shares fell by $0.0225 or 11.25% to an 8-year low of $0.1775 after the Vancouver, BC based junior miner announced a very dilutive $2.7 – $3.5-million financing at just $0.17 a share.

Going against the downturn – the price of New Gold Inc. ‘NGD-T & N.A’ stock rose to a new 11/2-year high of $2.05 on word the Toronto, ON based miner would be included in the S&P/TSX Composite Index as of December 18th. Inclusion in the index is usually bullish for a company’s share price as it will allow more conservative funds to hold the stock.

Snowline Gold Corp. ‘SGD-V’ shares’ rose by $0.23 or 4.93% to $4.90 after the Vancouver, BC based mineral explorer released diamond drill hole assays, including Hole V-23-061 from the company’s Rogue Project in Yukon that averaged 2.46 grams per tonne gold (g/t Au) over an astounding 519.6 metres (m).

Delegates of the COP28 World Climate Action Summit in Dubai, United Arab Emirates recognized the key role of nuclear energy in reaching net zero carbon emissions and launched a declaration to triple nuclear energy capacity by 2050.

Meanwhile, the quiet uranium bull market continued with the price of U3O8 rising to a new 16-year high of US$81.45 a pound.

Which certainly helped the price of Sprott Physical Uranium Trust ‘U.UN-T’ units to close at a new 15-year high of $27.17 and the shares’ of NexGen Energy Ltd. ‘NXE-T’ to close at a new all-time high of $9.33.

Lithium fell to a new 21/3-year low of US$13,704 a tonne.

All of which helped the price of Standard Lithium Ltd. ‘SLI-T & N’ drop to a new 3-year closing low of $2.72 and Lithium Americas Corp. ‘LAC-T & N’ shares’ to close a 2-month low of $8.42.

Not even lithium giant companies were immune as the price of Albemarle Corp. ‘ALB-N’ stock fell to a new 3-year closing low of US$113.26.

The selling pressure continued for First Quantum Minerals Ltd. ‘FM-T’ as the Toronto, ON based miner’s stock price fell to a new 3-year low of $10.39 after the Panama Government ordered the Toronto, ON based miner to immediately shut down its lucrative Cobre Panama copper/gold mine.

All of which helped the price of Franco-Nevada Corp. ‘FNV-T & N’ to close at a new 23/4-year low of $146.04. Franco gets about 20% of its gold streaming revenue form First Quantum’s Cobre Panama copper/gold mine.

The United States confirmed its position as the world’s largest crude oil producer, as the nation has raised its daily production by 800,000 barrels per day so far this year to a record 13.2-millon barrels of oil per day (MMBls/d).

Similarly, America’s crude oil exports rose by 12.09% in the past year to 4.755-MMBls/d.

Suncor Energy Inc. ‘SU-T-& N’ projected the Calgary, AB based Canadian oil giant would increase its oil production by about 7% in 2024 to about 770,000 – 810,000 Bbls/d.

While to the south – ExxonMobil Corporation ‘XOM-N’ expects the American energy behemoth to see its oil production to rise from about 3.8-million oil-equivalent barrels per day (BOE/D) next year to about 4.4-million BOE/D by 2027.

Meanwhile, Canada’s most costly pipeline project – The Trans Mountain Expansion (TMX) had another setback after the Canada Energy Regulator (CER) denied the company’s request to install a smaller diameter pipe in a 2.3-km section of “very challenging” rock conditions between Hope and Chilliwack, BC. The denial will add about 60-days to the pipeline’s anticipated completion in the first quarter of next year.

After many years of submissions for and against – the Michigan Public Service Commission granted Canada’s Enbridge Inc. ‘ENB-T & N’ permission to re-route 4-mile section of its Line 5 petroleum pipeline that runs under Lake Michigan, into a concrete tunnel that will better protect the pipe from punctures or spills.

The Canadian federal government introduced its ‘Cap-and-Trade’ plan to force petroleum companies to reduce their emissions by 38% from 2019 levels by 2030. The plan was immediately rejected by the provinces of Alberta and Saskatchewan, and the petroleum sector.

All of which helped to pull the Cenovus Energy Inc. ‘CVE-T & N’ and Crescent Point Energy Corp. ‘CPG-T & N’ down to respective new 5-month closing lows of $21.81 and $8.92.

This as the price of crude oil fell to a new 5-month low of US$69.17 a barrel and natural gas dropped to a new 3-month low of US$2.55 per million British Thermal Units (MMBTU).

The key Baker Hughes Petroleum Rig Count 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.

Going back to the gold rush days – it was often said that those that serviced the miners did better than the miners themselves. The same could be said today for Major Drilling Group International Inc. ‘MDI-T’ as its shareholders saw their investment rise by $0.66 or 8.34% to $8.57 after the Moncton, NB based drilling services company reported a 10-year high quarterly revenue of $207.0-million.

Lumber and uranium were the commodities that had the greatest gains on the week, while lithium and silver were off the most.

The CRB Commodity Index fell to a new 4-month low of 296.

The major American markets rallied late in the week with the Dow 30, S&P 500 and NASDAQ all reaching new respective closing highs of 36,248, 4,604 and 14,403.

Going the other way – the CBOE Volatility Index or VIX fell to a new 4-year low of 12.40.

For the Week – the DJI gained 0.006% to 36,248 with the S&P 500 up 0.20% to 4,604 and the NASDAQ ahead by 0.69% to 14,403. In Canadathe TSX lost 0.59% to 20,332 and the TSX Venture fell 1.47% to 538. The CBOE Volatility Index or VIX fell 1.32% to 12.40.

With currencies – the Canadian dollar lost 0.98% to US$0.7261 while the U.S. dollar ‘DXY’ gained 0.25% to 103.99. 

With commodities – gold bullion lost 3.33% to US$2,003, as silver fell 9.73% to US$23.00, and copper lost 2.05% to US$3.83, while lithium lost 17.62% to US$13,704. Crude oil lost 3.72% to US$71.17 and natural gas fell 8.27% to US$2.55, while uranium gained 0.56% to US$81.45. With soft commodities – lumber rose 0.76% to US$530. Overall – the CRB Commodities Index lost 2.92% to 299.

One Last Thought – Canadian officials welcomed a recent panel decision under the updated North American Free Trade Agreement that found that elements of American calculations of softwood lumber dumping duties were unwarranted and inconsistent with the country’s own laws and should be revoked right away.

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